Phoenix ‘Home Sales Are Down And So Are Prices’
The Arizona Republic has the ‘bad news’ for homowners. “On Tuesday, Maricopa County residents will start getting the news: Your homes are worth a lot more, and you’re likely to be paying more in property taxes. More than 1.3 million notices of property values will begin hitting Maricopa County mailboxes, bringing news that’s sure to cause delight and consternation.”
“It will be unknown how these latest valuations will translate into taxes until local governments set their budgets and lock in tax rates in August 2007. Property owners will receive tax bills for the new assessments a month or so later. Although higher taxes are likely, a more valuable home doesn’t necessarily mean a costlier tax bill, cautioned Treasurer David Schweikert. ‘As long as the taxing districts don’t spend more money than the revenues from new construction, most people’s tax bills will stay about the same,’ Schweikert said.”
From a columnist. “Bad news for the many homeowners trying to sell: It’s likely only going to get tougher. The number of home listings in metro Phoenix is at an all-time high. In January, there were 30,113 houses for sale across the Valley. A year ago, there were 3,402.”
“Some sellers still don’t realize the housing market has deflated from last year’s peak. Not only are the bidding wars gone but so, too, are many of the buyers. Most of the speculators who sparked multiple offers on homes early last year are long gone, and there aren’t as many regular buyers because fewer can afford today’s higher home prices. The typical house costs 50 percent more, and the typical income climbed less than 5 percent in the past year.”
“Any Valley homeowner with a good crystal ball would have sold last summer and rented until now to be able to take advantage of all the deals out there. I didn’t, but I wish I had. Who would have guessed home prices would climb 50 percent in a year? And who knows where they are headed?”
“Valley home sales are down and so are prices. Foreclosures are bound to climb, but they haven’t so far. Tom Ruff said only 41 homes went on the foreclosure auction block last month. That’s a slow month for the many real estate syndicators hanging out on the county courthouse steps to buy bargain homes. But long before those houses go on the block, investors are trying to buy people out for less than the property is worth.”
“Ruff predicts Valley home foreclosures will shoot up by the end of the year. They already have in other overheated housing markets on the East and West Coasts.”
Property prices have been falling for four years in Sydney:
http://www.theaustralian.news.com.au/common/story_page/0,5744,18281636%255E643,00.html
Interesting to see how Australians are responding.
Okay, something that I take great personal interest in: what the heck is going to happen to my apartment rent in the coming months and years? It makes sense to me that Sydney rents increased due to increase numbers of renters. How will this play out in regards to apartment, condo, and home renting here? Specifically, I am in San Diego - but I presume we’ll have similar issues in all of the bubble areas.
In metro DC, I expect rentals to fall as well, since a lot of the sellers who can’t sell or can afford not to, will rent.
Paying higher rent is still preferable to buying at this time. I hope you have other choices in places to rent. Good luck.
Thanks for the comments/concern, but we’re actually renters by choice. Just kind of curious as to what might happen so as to gain an advantage on the leasing office, if any. They’ll never advertise a drop in rent to current renters - but I could always ask. We renewed for a second year last summer. They told me the rent wouldn’t change if I signed a 12-monther (First time in my life that rent hasn’t increased by a tad upon renewing). Here’s hoping that I can barter a better deal this year.
‘The number of home listings in metro Phoenix is at an all-time high.’
Remember when we were told prices were rising due to a housing shortage? Don’t record numbers of for-sale inventory then mean declining prices?
I love it when the sheep and “economists” say prices rise due to a housing shortage. They’ve been saying that in N. Va for years.
Here’s the rubbish that the Northern Va Assoc. of Realtors was saying a couple of years ago:
http://www.nvar.com/newsdetail.lasso?articleno=nvarn100455
http://www.nvar.com/newsdetail.lasso?articleno=nvarn100457
At least their used-home inventories are still increasing. Revised Realtor’s (TM) mantra: For-sale inventories always go up.
All this is true, however, over at Realtytimes is the following on the Phoeinx market:
SATURDAY, 02/25/06
We still have the lowest inventory in a very long time. a few contracts are stating that Buyer(s) will pay above the appraised value - usually with a maximum - (if the appraisal comes in below the Sale Price): For your information, Lenders will lend only X% of the Contractually Agreed Upon Sale Price, OR the Appraised Value, whichever number is “Lower”. Even the contingency of an inspection is being deleted by some (though only a few).
January 2005 set a record low for the supply of existing homes available for sale (and it hasn’t improved significantly since that time).
We are still in a Seller’s Market.
About Dottie Stein:
REALTOR & e-PRO: “No Beginner, No Kidding” —
“Successfully Selling Arizona since 1979″
There is No Substitute For Experience
“January 2005 set a record low for the supply of existing homes available for sale (and it hasn’t improved significantly since that time). ”
Let’s examine this, January 2005, 3,042 homes on the market, January 2006, 30,113 homes for sale. How many more do we need before it is considered an “improvement”. I mean percentage wise, there is a kabilloion more homes available than a year ago.
Bill Buckner, CRS, e-PRO, CRMC,Realtor
Memo to self….Monday cancel my subscription to
“Realty Times”.
Bill Buckner
She needs another profession because she obviously can’t get her numbers straight. Must be a rookie.
What planet is she on?
There is no substitute for 27 years of lying experience.
Dottie isn’t selling securities, so she can feed the suckers any line that will close the deal. How about that surname? Likely very intelligent, but greedy. She’d use salt blocks before selling the herd too!
Memo to self: Monday cancel my subscription to “Realty Times”.
LOL
===“Valley home sales are down and so are prices. Foreclosures are bound to climb, but they haven’t so far. Tom Ruff said only 41 homes went on the foreclosure auction block last month.”===
Of course, foreclosures haven’t hit Phoenix yet. Haven’t hit California either. That’s because prices have held up. If you can sell for more than you bought, there’s no need for foreclosure.
Back during the early 90s decline in Calif, prices peaked in 1990. But foreclosures didn’t peak until 1994. So it takes some time for this cycle to unfold. If prices stay flat or fall for the next few years, and as exotic financing begins to re-set, foreclosures will skyrocket.
This may not reach its apogee until 2008-2011. Will be interesting to see how China (and other FCBs) react to a crapped-out US housing market given that they now hold almost $500 million in US mortgage paper.
Right on. It will take time for this to unwind. There is no doubt in my mind that we are starting the slowdown process. Homes in my subdivision here in gilbert are taking a long time to sell. I see price reductions that are not working. Inventory is increasing daily. Speculators left the market and now there is a smaller pool of buyers here.
Transactions dry up.
Prices levitate for awhile.
Then prices start to fall.
As prices fall,transaction volume bulids(Panic sets in).
Finally, capitulation.
Classic market dynamics.
Theirs going to be alot of people that look like Deer staring into headlights over the next few years.
I just went to realtor.com and typed in Phoenix, AZ and got 6,268 SFHs and condos. Adding all surrounding areas (Scottsdale, Tempe, etc.) I got 24,101.
As a person who is obsessive about numbers, I’d have to say all the numbers quoted in the above article are worthless, rendering the conclusions meaningless.
Go to ziprealty.com, click mls search, and click phoenix metro. Select all cities to right side and do search. This shows ~ 36000 homes on market.
Oh, that’s the web site where they add new inventory every day but only purge the sold properties every few weeks? I wouldn’t trust those numbers either.
Yeah, you’re right, better not to trust anything that suggests anything that contradicts with your preferred view of the world.
LOL
Even if what you say is true (I’d like to see some evidence), there were 5,200 properties sold in the Phoenix metro area in Jan. Let’s say that this purported “few” is, say, three weeks. Then that would equal an overstatement of around 4,000 houses, which really doesn’t make that much of a dent.
And anyway, what is interesting about inventory figures is mainly relative numbers. I think you’d have to be in complete denial not to see ballooning inventory in the Phoenix metro area.
Find me one expired listing @ Zip. Good luck…because you won’t. They don’t even continue to list AWCs…so they certainly don’t keep old listings.
P.S. Can you really buy a 3-year-old condo in Phoenix for $25,000?
http://www.realtor.com/Prop/1054451516
Somehow, I doubt it.
Probably a timeshare.
Ahh, that would make sense. But then it shouldn’t be included in the total count, should it? I noticed there were quite a few in this price range.
I don’t know how they do the count actually. Zip realty seems to have good data but I’m not an expert on the site. It is just a tool in my bag.
no not a timeshare. Given where it’s located….finger malfunction typing in the price. prob’ly dropped a 0.
It’s a garage, and you must already own a condo to purchase.
On the other hand, if you are looking for a bargain in Phoenix, here’s a cute little place for $148,950:
http://www.realtor.com/Prop/1050840720
I have been to this community. It is in south phoenix by trend homes. They are sold out of this model. It was cheapest and went fast.
Other than being a two-story home, it looks like a nice place for empty nesters.
This one looks like it would make a great rental property. I bet it would cash flow positive within two years.
http://www.realtor.com/Prop/1054602559
Here’s another one I like, right on a golf course in Sun City, for $165,000. I had no idea housing in Phoenix was so affordable. I might have to go down there and scoop up a few.
http://www.realtor.com/Prop/1054018811
Knock yourself out, card shark!
Please, pop on down. Make ya a deal on one I’ve got, about 1 1/2 mi down from this one. Not so much I-10 noise, makes hearing the automatic gunfire SSSOOO much easier. Yup, you just might be able to go cash positive on it. Big yard too. Easier to draw a bead & lead ‘em!
Hopefully you are over 55, because that’s a restricted community, and you must 55+ to purchase…which explains why it’s so inexpensive.
I narrowed my Phoenix search to houses between $125,000 and $200,000 and I got 525 hits. It appears there is plenty of affordable housing in Phoenix, some of it quite nice.
Let’s see how “nice” it is in a few years after a couple of generations of lowrents pass through there and the, ahem, “quality” construction no doubtedly used begins to come apart. I’m sure there are plenty of mullets eager to sell to you.
Actually, Phoenix had really nice, affordable housing till just a couple years ago. That why all the bubble crazies descended on it.
When the prices come back down, you may be able to find lots of affordable homes that are actually well-built. It used to be a beautiful city, but I don’t what it’s like now, other than huge.
Does anyone have any idea on price reductions in the PHX area? With the count over 36K you would think that they would be starting pretty soon?
I think it is just a matter of time before the realtors there start changing the whole context of their conversations.
For instance today you might hear a realtor say something like;
I couldn’t meet my girlfriends for lunch today because I promised a client I’d drive him around in my Hummer and help him find a house.
Next year it’ll go something like this;
I couldn’t meet my girlfriends for lunch today because I had to go over to a client’s house and give him a “Hummer”.
That will be a sign that you know it is safe to go out and bid on a house!
So you choose to believe the 36,000 number?
http://www.jimmessenger.com/mls.php
Look at this website for Phoenix MLS
You choose to believe Real Estate only goes up?
He’s in Las Vegas, ground zero for bubble fallout. I’m sure it’s weighing . . . . must hold onto hope/denial.
I suspected as much as soon as he started his carnival barking routine with “cash flow” listings.
There are couple of those types on this blog. One in Va. too. Wish there was an ignore feature.
Or the “I buy at wholesale” crowd.
There hasnt been wholesale in this market for a few yrs
It doesn’t matter what source you use for your numbers as long as you are consistent. I prefer to use Realty.com with specific zip codes where I might be interested in buying. The numbers have been consistently rising EVERY day over the last two months and have seen most of the homes sitting that whole time. Soon they will be cutting prices.
good article, maybe it should be in the money and metals blog?
On Wall Street, the Inflation View Is Rosier Than It Is on Main Street
last time, this is from saturday’s New york times:
February 25, 2006
Off the Charts
On Wall Street, the Inflation View Is Rosier Than It Is on Main Street
By FLOYD NORRIS
CONSUMER prices in the United States are rising rapidly. Or maybe they are not.
The government’s report this week showed that the Consumer Price Index rose 0.7 percent in January, bringing its 12-month gain to 4 percent. That is down a bit from the peaks of last fall, but the annual rate had not been 4 percent or more since 1991.
Did that bring despair to markets? Just the opposite. The talk among some Wall Street economists was that the Federal Reserve was now less likely to raise short-term interest rates again. The stock market rose on the news.
These days, Wall Street pays more attention to the core rate of inflation, which ignores food and energy prices. The core rate edged up just 0.2 percent in the month, leaving the annual gain at just 2.1 percent.
To ordinary people, that fascination with an index that ignores two of the most necessary parts of life may seem odd. The logic to it is that the volatility in energy prices will wash out, and that the core rate does a better job of showing the underlying trend.
Perhaps so, but year over year, the core rate has been lower than the overall gain in the C.P.I. for 39 consecutive months. That is the longest such stretch since the government started computing the core rate in the 1950’s. Energy prices have been volatile, but the expected return to lower levels is not happening.
Another reason the inflation view from Main Street is less rosy than the one on Wall Street is the way a third necessity — housing — is measured in the index. The government estimates what rents would be on homes occupied by owners, and ignores sale prices. The 4.3 percent rise in housing costs over the last 12 months is higher than the rent increase of just 2.5 percent, largely because the cost of heating homes is up.
That is not the way the government used to do it. Until 1982, it considered the change in the price of houses, along with the level of interest rates. Greg Jensen of Bridgewater Associates, a money management firm, estimates that if the C.P.I. housing component were still computed the old way, both the core and the overall rate would be about 2 percentage points higher. How does 6 percent inflation sound?
Even the old method did not fully pick up the rising value of homes. The government’s best house-price index, from the Office of Federal Housing Enterprise Oversight, will be out next week for the fourth quarter. But through the third quarter, it was up 12 percent year-over-year. Since the end of 1995, that index shows that home prices have doubled, while the C.P.I. shows housing costs are up by a third.
Rising home prices have made consumers feel more wealthy and given them more money to spend as mortgages are refinanced. But Wall Street looks at a Consumer Price Index that pays little attention to such rises, and says inflation is low. It is fun while it lasts.
How much longer until the general public raises the bullsh*t flag on this whole CPI issue?
This number has been tortured so long it is just begging to be put to out of it’s misery. The folks that have gone back to computing this in pre Boskin commission methodology put CPI at 7%+.
Does anyone remember the CPI that caused Nixon to implement price controls? I thought it was in the 4% range but I can’t recall.
At least the MSM is raising the possibility that what is focused on by the FED (core rate) is becoming irrelevant. About time.
An aritificially low CPI keep indexed Gov programs that actually help taxpayers (like Social Security and Gov/Military pensions) from increasing as much as true inflation. More money for foreign wars!
I have been saying this to many people for a long time! THANKS!!!!
I’m not sure who it’s fooling anymore. Maybe just the hacks on WS. Cause I can tell you that the people I work with know it’s full of S*)(#…. oh wait, I forget that they’re not Harvard/Yale/Stanford trained economists. They just look in their wallets.
Not everyone sees the sky falling for housing prices just yet, even in PHX and even SD:
—————————————————————————————
HOUSING SCENE LEW SICHELMAN
Housing prices still going through the roof
February 26, 2006
WASHINGTON – Nope. Still not yet.
According to the first official government numbers you’re likely to hear about in the coming weeks, the run-up in housing prices continued unabated in the fourth quarter, ending 2005 with a whopping 16.1 percent gain over the year before.
In other words, the widely anticipated slowdown in home-price appreciation has failed to materialize, with many of the nation’s most affordable – and, heretofore, most sensible – markets finally joining the party.
http://tinyurl.com/jkqeh
———————————————————————————-
Too bad Lew’s data are hopelessly out of date! Maybe he should pay more attention to the data posted here by the “sky-is-falling” crowd which he callously disparages in his article.
Ben, I also wonder how long it will take for the rising inventory to lower home prices. As Rich Toscano (piggington.com) has stated, home prices are sticky on the way down. When I read this late last year, I was doubtful. Now I see this is true.
All around me, neighbors have their homes for sale at ridiculous prices. Although 1/3 of SD homes are reduced, the reductions are minor, like a $950K house reduced to $945K or $930K. I see listings expire, and homes relist. My realtor, who sold my house for me in January, told me of 2 of her listings where either the listing or an adjacent comp sold for a lot less, bec. the owner needed to sell, thus pulling down the comps for the entire neighborhood. So far, these scenarios are rare.
I checked realtrytrac.com, and found 5 houses of people I know in pre foreclosure. Two are for sale, and have had a very minor price reduction. The other 3 are not even for sale. I guess the people are trying to come up with the money to save their house, or finish their mandatory bankruptcy counseling.
There are duplexes, 2 near me, listed at $550K. With no reductions at all, although one has been listed since last fall. This family is trying to move up to a bigger home, but can’t do it without selling their home. Sticky prices…
“… home prices are sticky on the way down. When I read this late last year, I was doubtful. Now I see this is true.”
There is a cottage sub-industry in academic real estate economics of research which tries to explain this phenomenon…
STICKY =’S Denial …. We may stay here for a while as we did in the early 90’s. Many people forget history and tend to repeat their mistakes but justice always prevails.
People are still in the stuborn denial phase. They refuse to see that conditions have changed. Their denial will cost them dearly, if they hold on to long. The smart few will drop prices to what the market will bear(lowering the comps). The dumb ones will get taken out by foreclosure, or suffer many years of being upside down.
Prices do tend to be ’sticky’. In a falling market many new homeowners would have to pay out cash at escrow to sell their house. Many don’t have, or can’t bear, to pay cash into escrow. So they are stuck in their house unless they can find some sucker to pay too much for it.
Price reductions start first with new home sales from builders. Then older resale homes prices will fall. Newer resale homes probably won’t reduce much until they start being offered through foreclosure sales.
New record Phoenix Inventory
7/20/2005 10748
7/21/2005 10968
7/22/2005 11122
7/23/2005 11424
7/24/2005 11338
7/25/2005 11112
7/26/2005 11315
7/27/2005 11353
7/28/2005 11390
7/29/2005 11471
7/30/2005 11656
7/31/2005 11609
8/1/2005 11599
8/2/2005 11590
8/3/2005 11635
8/4/2005 11714
8/5/2005 11710
8/6/2005 12196
8/7/2005 12658
8/8/2005 12919
8/9/2005 13244
8/10/2005 13099
8/11/2005 13245
8/12/2005 13389
8/13/2005 13846
8/14/2005 13801
8/15/2005 13607
8/16/2005 13779
8/17/2005 13992
8/18/2005 14087
8/19/2005 14279
8/20/2005 14321
8/21/2005 14457
8/22/2005 14336
8/23/2005 14391
8/24/2005 14529
8/25/2005 14617
8/26/2005 14792
8/27/2005 15011
8/28/2005 14984
8/29/2005 14803
8/30/2005 15042
8/31/2005 15099
9/1/2005 15063
9/2/2005 15159
9/3/2005 15404
9/4/2005 15699
9/5/2005 15621
9/6/2005 15513
9/7/2005 15913
9/8/2005 16106
9/9/2005 16489
9/10/2005 16716
9/11/2005 16609
9/12/2005 16697
9/13/2005 16538
9/14/2005 16900
9/15/2005 16952
9/16/2005 17419
9/17/2005 17583
9/18/2005 17577
9/19/2005 17636
9/20/2005 17516
9/21/2005 17664
9/22/2005 17883
9/23/2005 18226
9/24/2005 18204
9/25/2005 18196
9/26/2005 18435
9/27/2005 18483
9/28/2005 18605
9/29/2005 18604
9/30/2005 19192
10/1/2005 19333
10/2/2005 19316
10/3/2005 19362
10/4/2005 19463
10/5/2005 19562
10/6/2005 19670
10/7/2005 20052
10/8/2005 20219
10/9/2005 20153
10/10/2005 20324
10/11/2005 20470
10/12/2005 20668
10/13/2005 20850
10/14/2005 21238
10/15/2005 21446
10/16/2005 21463
10/17/2005 21527
10/18/2005 21588
10/19/2005 21795
10/20/2005 21806
10/21/2005 22302
10/22/2005 22719
10/23/2005 22769
10/24/2005 22806
10/25/2005 22976
10/26/2005 23132
10/27/2005 23293
10/28/2005 23681
10/29/2005 23805
10/30/2005 23816
10/31/2005 23790
11/1/2005 23601
11/2/2005 23665
11/3/2005 24193
11/4/2005 24579
11/5/2005 24786
11/6/2005 24717
11/7/2005 24937
11/8/2005 25244
11/9/2005 25333
11/10/2005 25387
11/11/2005 25700
11/12/2005 25685
11/13/2005 25773
11/14/2005 25945
11/15/2005 25913
11/16/2005 25884
11/17/2005 26261
11/18/2005 26098
11/19/2005 26662
11/20/2005 26688
11/21/2005 26684
11/22/2005 26488
11/23/2005 26776
11/24/2005 26819
11/25/2005 26855
11/26/2005 26871
11/27/2005 26890
11/28/2005 26979
11/29/2005 26811
11/30/2005 26797
12/1/2005 26792
12/2/2005 26915
12/3/2005 27238
12/4/2005 27295
12/5/2005 27356
12/6/2005 27387
12/7/2005 27403
12/8/2005 27367
12/9/2005 27649
12/10/2005 27706
12/11/2005 27664
12/12/2005 27512
12/13/2005 27411
12/14/2005 27566
12/15/2005 27517
12/16/2005 27603
12/17/2005 27791
12/18/2005 27776
12/19/2005 27722
12/20/2005 27604
12/21/2005 27554
12/22/2005 27516
12/23/2005 27486
12/24/2005 27311
12/25/2005 27014
12/26/2005 26810
12/27/2005 26822
12/28/2005 26687
12/29/2005 26649
12/30/2005 26547
12/31/2005 26497
1/1/2006 26462
1/2/2006 26401
1/3/2006 26751
1/4/2006 27403
1/5/2006 27564
1/6/2006 28224
1/7/2006 28337
1/8/2006 28542
1/9/2006 28595
1/10/2006 28786
1/11/2006 29222
1/12/2006 29507
1/13/2006 29689
1/14/2006 29899
1/15/2006 30415
1/16/2006 30391
1/17/2006 30707
1/18/2006 30817
1/19/2006 31085
1/20/2006 31457
1/21/2006 31463
1/22/2006 31497
1/23/2006 31607
1/24/2006 31766
1/25/2006 31830
1/26/2006 32142
1/27/2006 32002
1/28/2006 32477
1/29/2006 32458
1/30/2006 32512
1/31/2006 32563
2/1/2006 32684
2/2/2006 33087
2/3/2006 33145
2/4/2006 32953
2/5/2006 33368
2/6/2006 33576
2/7/2006 33550
2/8/2006 33684
2/9/2006 33844
2/10/2006 34234
2/11/2006 34588
2/12/2006 34753
2/13/2006 34815
2/14/2006 34815
2/15/2006 34816
2/16/2006 34816
2/17/2006 35144
2/18/2006 35427
2/19/2006 36260
2/20/2006 35443
2/21/2006 35642
2/22/2006 35503
2/23/2006 35324
2/24/2006 35178
2/25/2006 36388
2/26/2006 36524