“Falling Back To Normality” In Arizona
Some reports from the Arizona Republic. “For the first time in a decade, median prices for resale homes in the Valley dropped last month compared with the same time last year. ‘We’ve had a major correction,’ said Lyn Truitt, a real estate broker in Surprise. ‘The market has slowed considerably. The new-home market is impacting the resale market.’”
“New-home builders are loading up on incentives for buyers that artificially maintain the price. The reason: It allows builders to maintain the price point and not infuriate recent homebuyers who paid top dollar.”
“New-home sales have driven the Surprise market the last few years, and those sales are down significantly this year. ‘The domino effect is affecting all sales,’ Truitt said. ‘People who want to move up can’t sell their homes.’”
“The West Valley’s resale housing market continued to slide in September, which brewed a storm of increased listings, a drop in the number of recorded sales and a decrease in the median sale price. Glendale’s resales slid from 780 to 400, Peoria’s declined from 470 to 190, and in Surprise, the number dipped from 415 to 190.”
“Median year-to-year sales prices from September fell in every West Valley city except Glendale and Sun City West.”
“The process of finding the perfect home can be overwhelming with the large number of listings. ‘It creates a scenario where it takes buyers longer to make a decision because there’s so much inventory,’ said Dave Karrick, a real estate agent in Peoria. ‘Without a doubt, people can be more picky in this market.’”
“For years, buyers in metro Phoenix assumed if they purchased a house, it would increase in value the next year. The drop in median price leaves many potential buyers apprehensive about the future. ‘That fear is keeping a lot of people on the sidelines,’ Karrick said. ‘The market has certainly deteriorated and it seems every month it’s getting softer and softer.’”
“Kim Arnold and her husband, Rufus, have had their 1,900-square-foot Sun City Grand home on the market for six weeks. ‘Sure, if we sold it last April it would have been a piece of cake, but we know that isn’t possible right now,’ Kim Arnold said. ‘For us it’s not aggravating because the market is slow and we know the perfect person will come in eventually.’”
“The Arnolds’ real estate agent, Meredith Andrews said that during last year’s seller’s market, at least 10 people would show up to an open house. One showed up to a recent open house at the Arnolds’ home.”
“Home prices in Scottsdale had increased nearly 17 percent through August, compared with the period a year ago. What a difference a few weeks make. Sales now are way off, and prices are starting to erode in the Northeast Valley, where the number of for-sale signs has nearly doubled from a year ago.”
“With Northeast Valley home sales off 56 percent this year, buyers seem to be waiting for prices to fall. Recent home buyer Donna Vanauken of Scottsdale calls it a ’seller’s hangover’ from last year. Vanauken was determined to wait out the market when she went looking in April at dozens of homes and condominiums.”
“She paid $369,000 in July for a 2,000-square-foot home. That was 13 percent below the asking price. Vanauken said she got a good deal but thinks prices will continue to fall. ‘I kind of wish I would have waited until the fourth quarter,’ she said.”
“There were 5,741 Northeast Valley homes on the market as of last Friday, said Karl Stauffer in Scottsdale. That is up 92 percent from the same time last year. There is a nine-month supply of homes now, compared with a 3 1/2-month supply last October, he said.”
The Arizona Daily Star. “The median price of a resale home last month reached its lowest level since June 2005 as sellers continued to cut prices in a cooling market. ‘We’re seeing people dropping their prices in retail and getting back to what was normal,’ Tucson housing consultant John Strobeck said. ‘We’re falling back to normality.’”
“Paul Olson, president of the Tucson Association of Realtors MLS (said) numbers for September will show a decline in the number of new homes listed for sale. ‘I think it’s a positive thing for sellers, because they’re having a hard time right now with the inventory,’ Olson said. ‘Right now they have so much competition with 9,600 listings that they’re waiting a lot.’”
The Review Journal from Las Vegas. “Like other mixed-use developments in Las Vegas touted as the newest hip place to “live, work and play,” Urban Village on Las Vegas Boulevard South has apparently crumbled before it ever took shape.”
“Several sources in the local real estate industry said the 50-acre, $1 billion project by a resort-style subsidiary of Dallas-based Centex Homes, has been canceled and the sales office is closed.”
“The on-site construction office for Centex Construction and Martin-Harris Construction was locked, dark and vacant Thursday afternoon. A banner on a recreational vehicle parked on the property advertised, ‘Now Selling Brownstones.’”
“Lane Wright, division president for Centex Destination in Denver, confirmed Thursday that the company has discontinued sales at Urban Village effective immediately and will refund deposits to about 75 buyers in the first phase of development.”
“‘No surprise, and we expect more to come,’ (realtor) Bruce Hiatt said about the canceled project. ‘Given current market conditions, it’s making it tougher and tougher for builders to succeed,’ Hiatt said. ‘Any new projects coming into the market are going to be challenged.’”
“Buyers are skittish about the market and are just waiting it out, he said.”
“The pool of luxury condo buyers (are) more skeptical about projects in Las Vegas, said Jeremy Aguero, principal of a Las Vegas-based research firm. It’s unrealistic to think the market can absorb the entire inventory of some 90,000 proposed units, he said.”
“‘I don’t think it’s going to be the last major project we see fall off the radar,’ Aguero said. ‘You’ve got a well-positioned, well-capitalized company in a well-located part of Southern Nevada. If that project had trouble making it, how many others are viable? These guys (developers) have a pipeline of projects and the market has changed. The market’s not there.’”"
‘For us it’s not aggravating because the market is slow and we know the perfect person will come in eventually.’”
Nope, I think the legislature finally outlawed lobotomies in Arizona.
But thanks for playing!
This is the seller’s only chance right now: Be the lucky one to sell the greatest fool!
cue Gomer: Surprise, Surprise, Surprise!
‘We’ve had a major correction,’ said Lyn Truitt, a real estate broker in Surprise.
A quote that needs no introduction.
No–a major correction has begun.
You’re right: in the areas that have held up the best, some homeowners are thinking they will escape the deluge. Instead they should realize there is still a tiny window of opportunity.
Lenders are still hungry, after all. The loan I posted about a few days ago, which I wouldn’t do, has had Countrywide calling and harrassing the prospective FB at all hours. C’wide wants the $7K fees, of course. The FB gains nothing by exposing her house to this risk. I told her to file BK, which will leave her owing maybe the 2001 price of her house after her unsecured debts are discharged.
She’ll hear what she wants to hear, take the loan CW offers and delay her inevitable BK by about 9 months. That’s my bet. Happens all too often.
‘For us it’s not aggravating because the market is slow and we know the perfect person will come in eventually.’
My wife and I have talked about possibly retiring to Arizona. Would it be too early to make an appointment for a showing on October 21, 2048?
“During last year’s seller’s market, at least 10 people would show up to an open house. One showed up to a recent open house at the Arnolds’ home.”
They’ll need the perfect idiot at this rate.
“New-home builders are loading up on incentives for buyers that artificially maintain the price. The reason: It allows builders to maintain the price point and not infuriate recent homebuyers who paid top dollar.”
Incentives = kick-back schemes enabled by fraudulently overvalued appraisals.
All of these have a most definite event horizon. At some point in the not too distant future, the overhang of unsold new stock, unsellable used stock and buyer/seller standoff will force a capitulation on absolute price. I would guess that the coming wave of foreclosure/auctions will suck the last life out of the new home market, resulting in true, potentially massive price drops. These reductions will only serve to further cripple the existing home market, leading to a race to the bottom.
How does your scenario preclude the use of appraisal fraud to obtain a loan at 10% above a home’s market value?
The lender orders an appraisal review and they cut the appraised value thus limiting the loan amount they are willing to approve. Lenders looked the other way when values were soaring. Now that the appreciation has fizzled they are finally very sensitive to overstretched appraisal values.
“The Arnolds’ real estate agent, Meredith Andrews said that during last year’s seller’s market, at least 10 people would show up to an open house. One showed up to a recent open house at the Arnolds’ home.”
Ok, which one of you guys made off with the doughnuts?
Ben, Correction for you sir… It’s the AZ Daily Star, not Daily Sun.
Important to give credit where it’s due for media that is finally doing its job exposing the bubble bursting.
Thanks for letting me know. I was looking at the Flagstaff site when I typed that in.
I don’t have any statistics to offer, but I do know from running on my daily route in the northeast valley (Scottsdale) that homes are not selling at all. I’ve seen the same “for sale” signs for 6 months. When I hear realtors saying its only reverting back to normal and homes take 60-90 days to sell, I know they talking a bunch of bull scatology. Inventory continues to grow period.
And yes, as is typical of people in a town like Scottsdale, most still think it’s different here. Recession proof is a word I overheard the other day. Oh well, we shall see won’t we.
About once a week, I bicycle through some very “desirable” neighborhoods in mid-Tucson (Sam Hughes and Poets Corner). My route includes three houses that have been on the market for over a year.
‘We’ve had a major correction,’ said Lyn Truitt, a real estate broker in Surprise. ‘The market has slowed considerably”
Sorry but I don’t think so. The correction thus far has been mild compared to what’s coming.
She should reword it to “we’re HAVING a major correction”
Yes, past tense is definitely incorrect. All we have “had” are some foresehocks.
BTW, Lyn Truitt placed second in the Surprise mayoral election in ‘03. If he runs again in ‘07, at least he will have something to occupy his time while things are quiet down at the brokerage.
What’s interesting to me about the Phoenix market is that asking prices are still outrageous. Even in mediocre neighborhoods, listings are still over $200 per sq foot. I’m waiting to buy but it is taking much longer for prices to come down than I anticipated. Any thoughts on this?
Yeah, stick with your plan and be patient.
$200 per sq foot isn’t so bad. It’s $500+ in my mediocre LA neighborhood.
Simply put, that we’re all losers here. Some will lose financially, some in frustration at being unable or unwilling to gamble. even those that bought early and sold at the high point are not immune. My sister made a serious bundle on just such a buy/sell, and contributed in her own right to our local price inflation. Now she frets and complains that her sons are priced out of the market. Go figure.
“New-home builders are loading up on incentives for buyers that artificially maintain the price. The reason: It allows builders to maintain the price point and not infuriate recent homebuyers who paid top dollar.”
To me this is just lame. Do recent homebuyers not read the paper? Are they really oblivious to the fact that the new buyers are getting more for their money, even if it’s still tremendously overpriced? How long do the builders intend to play this charade?
Interesting opinion piece from the LA Times.
The Pain of Selling Your Home
Op-Ed: Why owners often take their houses off the market even if they’d make a windfall.
http://tinyurl.com/y5hcr2
They should try selling by auction:
http://www.dumpinghomes.com
ha ha…I’ve already been receiving emails for REO listings from Realtors…I know it’s still too early in the game but it’s interesting how fast it’s changed!
Maybe I’ll put an offer in for $25K. It’d be cool if I was the only bidder since there’s no reserve price.
-From the LATimes piece-
“Knowing these quirks in decision-making helps us understand why some people take their houses off the market even when they stand to make a very large profit by selling them. Having been seduced — by real estate agents, by the media, by their neighbors — to set a high anchor, they will feel like losers even when they double their money.”
Kinda works that way at the blackjack table, too.
People just seem to enjoy buying all them ‘bright lights’, I guess.
Great article, though. Nice summarization of mass stupidity and financial suicide.
Loved that article. The guy has market pyschology framed perfectly.
Funny though, that we’re all contrarians to that point of view.
“We’ve had a major correction,” said Lyn Truitt, a real estate broker in Surprise. “The market has slowed considerably. The new-home market is impacting the resale market.”
Similar to yesterday’s California thread, builders in their attempt to underprice speculators are also underpricing the broader resale market and ironically cannibalizing some of their potential customer base (sellers in the resale market that want to buy a new home from a builder are by definition a segment of the builder’s customer base).
Yeah…this market is real healthy. On one hand, builders have declared a full blown price war on their ‘move-up’ customers. And on the other hand, the builder’s customers don’t know it yet. LOL, what a twist! We’ll work with you said the builder to the ‘move-up customer only if you first help me shoot myself in the foot.
From the OC Register..
October home market starts slow
The home market didn’t get any healthier in early October, new DataQuick figures show. Undoubtedly, this will be the 12th straight month that sales volume fails to beat last year’s pace. And the latest take on median price at $619,000 is 4.2% below June’s record high of $646,000. For the 22 business days ending Oct. 5:
Median price Change vs. ‘05 Volume Change vs. ‘05
Resale houses $679,000 +1.0% 1,786 -29.4%
Resale condos $440,000 -4.3% 749 -38.6%
New residences* $708,500 +4.9% 295 -33.7%
All homes $619,000 +1.3% 2,830 -32.5%
* Includes single-family homes, condos and converted apartments
“New residences* $708,500 +4.9% 295 -33.7%”
I would love to see how that +4.9% would change if you subtracted the value of incentives from the sale prices…
Yes, definitely. I don’t know all the types of incentives they have been offering in the OC…but I did hear about the cash referral one (Wm Lyon?) and another for discounted financing.
Pulte the Builder just offered a 30 to 35K price cut on some of his lower priced tracts .
I still can’t fathom figures like that. Median price for all homes was $619K, with 2,830 sales. Simple math states that there were 1,415 families who qualified for a mortgage GREATER THAN or equal to $619,000.
That is a LOT of high income people! Who are these people who qualify, and where do these people work?
One of Lansner’s articles, not too bad
Novel Mortgages Blamed
http://tinyurl.com/y5xseg
“A fresh study by researcher Chris Cagan at another First American unit in Santa Ana predicts trouble for a hunk of borrowers who took out exotic and other relatively new-styled mortgages.
By Cagan’s math, Orange County has 79,000 of these loans at risk – and 18,601 mortgages will default in the next five years. Bankers and loan investors will lose $3.9 billion on these busted mortgages.
Cagan insists that’s a manageable pain.
“It will sting those borrowers,” Cagan says. “But it won’t break the economy.”
$3.9 Billion in losses? No problem to the economy? In the OC alone? Do I hear the sound of cognitive dissonance?
Cagan must be a math wizard because I can’t see how this makes any sense.
“The Arnolds’ real estate agent, Meredith Andrews said that during last year’s seller’s market, at least 10 people would show up to an open house. One showed up to a recent open house at the Arnolds’ home.”
Oh, how you must miss those good ol’ days Meredith. When you could stick a sign on any old POS, sit on you rear, and wait for the wild eyed ’stupid money’ to appear.. violin music please..
“Several sources in the local real estate industry said the 50-acre, $1 billion project by a resort-style subsidiary of Dallas-based Centex Homes, has been canceled and the sales office is closed.”
Moreover, Aguero said. ‘You’ve got a well-positioned, well-capitalized company in a well-located part of Southern Nevada. If that project had trouble making it, how many others are viable?
The real question Ageuro is, how many unviable projects are already in the pipeline?
DNN realty news had az going down 25% as return to normal
wow, what happens if plain old bland returns
off 50%?
pretty soon people are going to realize that each month they wait means.
nicer house
better neighborhood
nice schools
largers house
lower price
we’re probably crossed what someone here called the zero point.
Yes, I’m saying the same thing as I look at these listings and think “jeez, if I bought that one a year ago I would have only gotten 1200 sq. ft. and would have paid 75k more for it”
the new housing developments/condos are going to be the housing equivalent of the Nasdaq.
(”We believe this is a unique piece of property that is well-suited to Las Vegas and the south Strip,” he said. “Interest from buyers in our first phase of development was encouraging, although it fell short of Centex’s internal presale requirements. Given this, it was necessary to allocate our resources elsewhere.”)
do you see this people? your project is not unique. you haven’t found a niche, you found an excuse to build during a bubble.
” New-home sales have driven the Surprise market the last few years, and those sales are down significantly this year. ‘The domino effect is affecting all sales,”
That is funny…. they actually have a SURPRISE MARKET in Arizona. Maybe every locality in the nation should be renamed “Surprise”to match the market. Forgive me if someone already made fun of this…don’t have time to read the whole thread.
I’ve been looking for some reliable numbers on how much inventory of unsold new homes are in the Phoenix metro (Maricopa and Pinal counties). There are currently about 54,000 existing homes listed for sale in that area, but what about the newly builts? I think that number is also close to 50,000 but I can’t find anything to back that up. Any one know about that?
I am a renter here in Phx metro and my lease is up in March. Still seems the asking prices are out of line. I have seen new builds in Pinal going for $75 per sq ft (too far out), but the prices in Gilbert/Mesa are still at $125 sq ft. Any suggestions on renewing my lease? Month to month, 6 months or another year?
I am also a renter, in Chandler. Rents are going down in my area. There are 16 homes for rent in my neighborhood alone, $1050-1500/month (lease terms are mostly negotiable). Almost all of them are 4-5 bedroom homes. Similar homes are on the market for $350k-$750k. Rent and save the difference! The market has a long way to go. I think we are at least a year away.