25,000 Spec Homes For Sale In Phoenix
A housing report from the Arizona Republic. “New numbers are in on the fallout from the investor home-buying spree in metropolitan Phoenix. As many as 40 percent of the contracts on all the new homes in the Valley during 2005 and early this year have fallen through. That translates to 25,000 spec homes, according to a new survey from housing analyst RL Brown.”
“Many new-home deals fell apart because buyers couldn’t sell existing homes. But there also were many investors who pulled out of new-home deals after seeing they couldn’t flip the homes for hefty profits.”
“Speculators snatched up existing homes last year and are now trying to sell them for a profit. Those extra homes for sale, by many people who never lived in them, have created a glut in some areas of the Valley.”
“Realty Executives President John Foltz said many of his agents ask where all the home buyers are in this ‘buyers market.’ His answer: ‘They’re living in overpriced listings.’”
The Arizona Daily Star from Tucson. “After months of study — and hope on the part of city officials, Bookmans Entertainment Exchange will not be moving its Grant Road store to Downtown, citing a lack of residents.”
“For about the last six months the local multimedia chain had been exploring a move to Downtown. ‘A traditional Bookmans is going to get 50,000 to 60,000 people a month,’ Feeney said. ‘With the Downtown population … we felt it would be difficult to sustain that kind of traffic volume in the immediate area.’”
“Bookmans’ executives had concerns about store space, adequate throughways to get to Downtown and parking once customers arrived. But it was a lack of residents in the immediate area that was the backbreaker, said Sean Feeney, Bookmans’ executive vice president.”
“This isn’t the first time a lack of residents has disrupted potential Downtown development. The city had hoped to build a grocery store at West 22nd Street and Interstate 10, but dissolved an agreement in November 2005 with Bourn Partners because there weren’t enough people in the immediate area to support a store.”
“Greg Shelko, director of the city’s Rio Nuevo Downtown revitalization project, said he was disappointed by the news, but he did his best to stay positive. ‘A key endeavor for us is not to lose sight of the need to build as much housing as we can in the coming years,’ he said.”
So imagine I bought a home in Phoenix 4 years ago right as the bubble really started to ramp. Would I be able to sell given I have the flexibility to lower my price considerably under last years spec home prices ?
Sure, and you can bet that is on the mind of many multi-year owners.
BTW, we can assume these 25,000 new homes are vacant. Adding that to the 14,000 to 19,000 vacant homes for resale, and thats a lot of dark windows!
Many multi-year owners are getting hit with a triple whammy of increasing property taxes/insurance/HOA dues as well as interest rate adjustments. Some will need to sell and will have to price low to move the sale quickly. This is where I get shady with the rental home situation changing. Unless you can raise your rents you’re going negative now if you weren’t before and if you’re a new investor you’re way underwater from the start. Do enough homes get pulled out of rental stock due to selling to real homeowners to make a difference ?
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i would love to see a Lou Minatti-style early evening drive-by video footage of developments with endless empty houses with dark windows.
You will, but I think it may take a year or two before we see Phoenix-like conditions here.
I hope for their sake they don’t see Houston-like conditions, circa 1986, but I think they will.
Ben, there are two dark windowed houses for sale between where I work and at the next major intersection where there is an Einstein’s and a Starbucks. One dark windowed place has some grafitti. Both have lots of weeds. Up by Starbucks and Einsteins in the morning (before it got to the 40s and 30s for the lows, you could find homeless people loitering. maybe some are camped in the back yards of the empty homes that I see. That zip code has an average AGI of $100,000, according to an IRS site that tallies incomes by who filed in what zip codes. Go figure!
Sure, but you don’t want to give it away, so you’ll chase the market down like all the other would-be investment geniuses.
I bought a house in central Phoenix in May 2003 for $160,000. Recent comps (and there are some, but not many) would suggest a list price of about $325,000. I believe I could sell immediately if I listed it for $250,000.
I considered selling and bubble-sitting, but I like the house, my mortgage payment (15 year fixed) is about the same as a comparable rental, and moving sucks. I probably wouldn’t move unless I could see a SoCal-type gain of $250k or more.
Price it right and it will sell. I sold a rental in 6 weeks in Aug. 2006. Sold about 10-12% below others on market. This was east Mesa.
That downtown Tucson “revitalization” is pretty hopeless. There are some very cool places there but overall, it’s a tough area to live in.
Are there any cities left in this country which aren’t touting some downtown revitalization project?
Uh… do you live here?
Happy to talk to ya off line.
We’re headed for the day of reckoning.
It’s all building up to something.
Something that can only be redeemed with,…..
Fire.
White city fighting, remember ?
The bubble is ending in ice, not fire.
With apologies to Robert Frost,
” Some say the bubble will end in fire,
Some say in ice.
From what I’ve tasted of inflation
I hold with those who favor fire.
But now that the bubble has already burst,
I think I’ve seen enough deflation
To say that for destruction ice
Is the more likely outcome,
And will suffice.”
“With 25,000 spec homes, now may be the time to buy”
Of course it is. Its always a good time to buy!
“So if you are looking for the best deal on a new home, it might be now.”
Is this a reporter or a cheerleader?
I hear this good time to buy crap all the time. It is the double speak of the REIC. They fling this stuff around like a farmer spreading manure on his field. This bullshxx is being spread from the top down with their freakin leader Lierah preaching it to all his congregation of realtor whores and loan scam artist. They know they are sitting on the edge of knife now and this spring will be the tell all book. I just hope the people who have not fell into the GF trap will have the will not to purchase for a couple of years so that all the fraud, corruption, and greed can come apart.
Spring 2007 the final housing battle. Spring 2008 indictments and Congressional hearings, Spring 2009 new legislation to put a cap in the ass of subprime whores.
Neither. Read the full story and you have to conclude she is just a dope who should have been assigned instead to covering neigborhood bake sales.
Sure. But it’ll be a better time to buy when there are 50,000 homes on the market.
I heard this prediction on a radio talk show. When the banks fail in the next couple of years you will be able to buy a home here for whatever taxes are owed from whatever agency holds all these foreclosed homes. Not as crazy as it sounds the more I thought about it.
Sorry, but in AZ, you have to buy the tax LIEN at auction, then (assuming it remains unpaid) pursue a foreclosure in 3yrs. CA does a straight auction sale, but it’s after 5? years me thinks. Yup, there will be bargains there, but it’ll take a while.
According to the NAR, now is ALWAYS the best time to buy….
That is like asking a drug dealer if it is a good time to buy crack.
Is there ever a bad time for cocaine ™ ?
Nope, cause cocaine only goes up (nostril-speaking).
Now is also the best time to Sell. In my Sunday newspaper (SD Union Tribune) I always look forward to reading what the local dimwit re agent has to say in the re section. This week was re always goes up.
I heard the quality of this new construction is poor. Any first hand observations from people in pheonix area? Is there really adequate water for all those houses?
Water isn’t the immediate problem in the Phoenix area. Plus when the shortage does materialize they can save a ton of water by implementing some regulations on landscape watering, pools, etc. Basically no such regulations city-wide, although some new developments have regulations.
Outside the heavily populated areas it is a different story. There are communities where they have to bring water by truck.
New construction is exactly what you would expect given the rapid pace, the customers who never bothered to inspect, and the quality of labor inputs.
This news about Tucson isn’t surprising at all. Tucson is paying for its development plans over the years, abandoning close-in neighborhoods and downtown in favor of the foothills neighborhoods way north and east. It’s probably too late for downtown considering how far away live the core of residents with retail money to spend.
I used to love digging in the piles of Paleolithic era guitars in the old Chicago Store downtown. The main problem downtown is that there is nowhere to park. I recall Grant/Campbell (where Bookman’s is now) was once “Tucson’s most dangerous intersection” for traffic.
The L-shaped hole in the backyard, which wraps from the front of the sliding-glass door to the side of the house, was a do-it-yourself effort to install a swimming pool, she said.
“He and his buddies did this themselves,”
Here it starts So CA . Really, everyone from Southern Cali should read this entire article. In my mind this is a portent of things to come. I remember reading over and over the same stories occurring in the 90’s in Palmdale/Lancaster. The edges are absolute toast, the rest gets burned badly.
catherine reagor is simply a mouthpiece/tool for the phoenix real estate industry. she continuously quotes biased sources. i don’t believe a word she quotes, and with 25K specs on top of the 55K other listings in the MLS, and sales at about 5K per month, looks like at least a year to recovery, provided nothing more gets built, and no one else lists. yeah, right, that will happen here.
“At the Realty Executives quarterly meeting last week, the veteran real estate executive gave 1,000 agents a formula to show people why it’s better to buy and sell in the Valley now.
Based on home prices or what buyers are willing to pay dropping 10 percent in the past year, buyers who could have sold their home for $400,000 last fall would have paid $600,000 to move up.
Now, the same buyers should look at selling their house for $360,000.
But they can move up to the same bigger home they looked at last year for $540,000.”
Thanks for the advice, Foltz.
In the April 4, 2004 Arizona Republic, you were quoted:
Realty Executives President John Foltz said not to expect any surprises from the Valley’s housing market this year, which is good news.
“Phoenix’s housing market is sturdy now,” he said. “Sales and price increases may not be dramatic this year, but they will be steady.”
This was shortly before the start of a record price run-up of nearly 50 % from July 2004 to July 2005, which was then followed by stagnation starting in Fall 2005. Foltz, you are just an awful prognosticator.
And from the March 5, 2006 Arizona Republic:
“We haven’t seen a decline in home prices in years, and I don’t think we will this year,” Foltz said. “For resale prices to decline, we would have to experience interest rates in excess of 10 percent and a job reduction of 40,000. Both are very, very unlikely.”
My, oh my. See quote one.
I live in a pseudo-upscale community, (non-gated), in North Scottsdale were large homes on min. ! acre lots list from appx. 900k and up. Yesterday, Sunday, I took a 30 minute stroll from my home and came across at least 10 open houses (resales). Visited about 7 of them, and was the only “shopper”. Brokers were telling me how this is a desirable area and a good buy. Meanwhile I can drive 15 minutes in any direction and find hundreds upon hundreds of new homes for sale in so called ‘”upscale” developments. IMO, its only going to get worse, (for the sellers).
A trailing stop on Pfizer activated today for me. I think this is another sign of stock peak. So in went my proceeds to money market funds. With my Arizona municipal bond fund, my savings bonds, CDs and money market fund portfolio, I will be able to buy one of those “upscale” Scottsdale homes with no loan in a couple of years, methinks. But I’m biased toward Flagstaff or Tucson.
Tucson, in my opinion is the better choice.
Yes Greg swann researched it. 25,000 spec homes are just what the market needs at this perfect time to buy.
Cool.
Cow_tipping.