“A Different Story” In Arizona
AZfamily.com reports from Arizona. “Just like the housing boom, the condo craze has also slowed down. The condo boom started as a cheaper alternative to buying a single-family home. But once the market became overcrowded with condos, some developers are now forced to rent.”
“‘Just recently, we had a boom just like the housing market in places like Phoenix and Florida. What happened was they just overbuilt,’ Phoenix broker Mike Bianchi said.”
“He said developers in the Phoenix metro area converted too many apartments into condominiums. ‘(Developers) took a ton of properties that were rentals before and turned them into homes,’ Bianchi said. ‘At the same time, (developers) flooded the market with too many condos and now there is not enough buyers for those homes.’”
“‘I think, currently, 98 percent of the apartments that are in the city of Tempe are currently rented,’ he said. ‘That’s an extremely high rate of rentals.’ That’s why you’re seeing some condos being converted back to apartments.”
“‘The good news for consumers is if you want to buy a property and you want to buy a condo, today is a great time to do it because there’s a ton of them on the market,’ Bianchi said.”
The Arizona Republic. “Connie Edelman is owner/broker of Sterling Fine Homes and Land, which has offices in Cave Creek, Scottsdale, north Phoenix and Surprise. Question: How long have you been in the real estate business? Answer: ‘I have been in real estate for 12 years and have lived in the Valley for 45 years.’”
“Q: Can you discuss trends in the rental market? A: ‘As homes sit on the sales market for a longer period, sellers look to the rental market to tide them over until the inventory decreases and the sales market picks up again. This has brought a flood of new inventory to the rental market.’”
“‘This has been especially noticeable in the areas that were hard hit by the investors. The increase in rental inventory keeps rental rates lower, making renting a good option for many who want to wait and see what will happen to prices in the coming months.’”
“Q: Some buyers are apprehensive about buying because of a fear the home’s value will go down. What is your advice? A: It is not a time to buy and flip a property, but for those looking to buy a home that they will live in and enjoy, it is a great buyer’s market.’”
The Arizona Daily Star. “As many as 2.2 million Americans with subpar credit could lose their homes through foreclosure over the next several years, a new report said.”
“In Arizona, the delinquency rate during the third quarter was 7.46 percent,an increase over the 5.96 percent in the second quarter of 2006.”
“There were 1,097,078 loans serviced during the third quarter of 2006 in Arizona. Of those, 2.93 percent of the homes had payments that were past due, an increase over the 2.44 percent of homes with late payments in the second quarter of 2006. In the third quarter, about 1.2 percent of all Arizona mortgages were at some stage of the foreclosure process.”
“The downturn in Arizona’s real estate market is translating into business for Catholic gift stores around the Valley, where shoppers are asking for the St. Joseph Home Selling Kit.”
“‘People come in very sheepishly and ask if we have the statue. They just want to get it and slink out again,’ said Mary Gibson, manager of St. Thomas the Apostle gift shop in Phoenix.”
“Gibson has seen sales of the kit, which retails for $6.95, rise dramatically since the first of the year. ‘During the real estate boom cycle of the past couple of years, we didn’t see any movement at all on the saint (statues). When the slump started and people realized that it was going to be around for a while, they started coming in,’ she said.”
“‘Back when the market was hot and you were practically interviewing people to see if you wanted to sell them your house, it was a different story,’ Gibson said. ‘St. Joseph is their last desperate attempt to get the house sold.’”
“Gibson said her shop is ordering more of the kits to keep up with the new demand.”
“The Treasures of Faith gift shop in Paradise Valley has been selling four to 10 kits a day, according to manager Loretta Winn. ‘They’re driving in from all over the Valley; it’s not just people from this neighborhood,’ Winn said. The shop, near Paradise Valley Mall is in the middle of a residential neighborhood where ‘For Sale’ signs abound.”
“Recently, Susan Schuerman of central Phoenix bought a statue to help sell the home of her boyfriend’s son. The homeowner hasn’t reported a sale yet, but Schuerman isn’t discouraged. ‘He’s not living on the property, so maybe that makes a difference,’ she said.”
‘The aging structures at the intersection of University Drive and Ash Avenue are being ripped out to make way for a 21-story condo complex and a corporate health food store. Developers also are scheduled to rip out at least three smaller buildings near University Drive and Forest Avenue in the coming weeks. The work will clear land for a massive mixed-use building with three towers, called University Square.’
‘Roy Hoyt, a neighborhood activist who lives near the demolition sites, said, ‘I’m afraid we’re going to see the same phenomenon in Tempe as in central and north-central Phoenix where buildings are being torn down and all of the sudden the land becomes too valuable to build on. We’re seeing it happen all over. Developers pay big bucks and now the market is no longer there, and we get to see vacant land for a decade or more.’
‘That won’t be the case at the Gentle Strength site, said Justin LaMar, the land’s developer. LaMar said sales on homes are planned for this winter and construction is slated to start in the summer, LaMar said. ‘We’ll start building as fast as we can,’ he said. ‘It’s a function of the process with the city. I’d love to start tomorrow.’
“…all of the sudden the land becomes too valuable to build on…”
I’m trying to figure that one out. Is that like, “She’s too beautiful to sleep with?”
It’s a function of the process with the city = no meaning whatsoever
guy should be a politician …
University and Forest??
If they touch the chuckbox, we riot!
Seriously, voted best burger in Phx something like 8 out of 10 years.
“‘I think, currently, 98 percent of the apartments that are in the city of Tempe are currently rented,’ he said. ‘That’s an extremely high rate of rentals.’ That’s why you’re seeing some condos being converted back to apartments.”
An extremely high rate of rental because too many folks do not want to buy now.
Smart people, those renters are.
Well, that and all the apartment conversions.
Yeah, it doesn’t take a lot of conversions to really make those occupancies jump.
The problem is that many conversions won’t come back on the market immediately. Many of the owners are going to be in workout situations with lenders, and/or holding out for rents that are too high.
I sense that that supply of rental properties will gradually increase over the next 24 months, as failed conversions, rooms for rent from desperate ARM holders, and empty homes (from specuvestors and people who bought before they sold) enter the market as it becomes clearer and clearer that selling for the price they “need” is not possible.
P.S. I was just looking to “move up” (ie. rent a bigger house) in my market. There are some interesting opportunities. You can clearly see, however, the difference between people who have owned their rental property for a number of years vs. those who weren’t able to sell their flip. The different in rents is ~30-50% or more.
that’s why I don’t believe rents are going up, I think they aren’t counting repartments, single family homes and etc. they probably also pay to much attention to wishing rents and not getting rents.
Rental Watch,
We get that “vibe” even here in OR. I check out Craigslist for a goof once in awile and it’s always funny for me to see homes that were for sale that are now for rent or lease or lease w/option to buy? WTF?
Since I’m on the phone all day every day it’s no big for me to call some of these guys and ask them to explain to me like I was a 4th grader just how this lease w/option to buy works and only about 1 in 10 have a clue. Seriously. They hem and haw their way through it and when I paint them in a corner and ask them why they are asking oh gosh I don’t know, 40 PERCENT over rental market they say it’s b/c this is a path to “ownership” so uh, it’s worth it right? Well DUDE, if RE was that freakin’ white hot why don’t you just go ahead and sell it then?! Uh, uh well maybe this “program” isn’t for you then? Well then WHO is exactly is it for? Well people w/bruised credit! Really? Well then riddle me this BatBrain! HTF is someone w/”bruised credit” going to be able to pay ABOVE what “owners” are barely able to pay?
I hate to admit it b/c I was an early advocate of LTO options but the people you are dealing with get more clueless (and desperate) by the day! Uh, let’s see here your “down payment” would be $6,637.89. O.K, you sure? Oh yeah, I’m sure. Well the reason I ask is b/c that sounds like exactly like the amount you’re probably in arrears! Oh hey, if you’re going to be THAT way (obviously insulted).
Next time you check back it’s “Make offer, going to foreclosure 12-20-06″. Gosh sorry dude, I was going to make an offer but it looks like you went to the courthouse steps yesterday! Better luck on “Specuvestor” next time! (I swear, it happens every time!)
You only have to go as far as new residential construction vs. household creation over the past 5 years to see that too many bedrooms have been built.
Rental Watch,
Well exactly. There’s a fellow over at patrick.net that says in his effort to “upgrade” his rental situation he’s DONE w/looking in the papers, on-line etc. Just go to open houses in neighborhoods you really like and ask the realtwhore if the owners would consider renting it! He hasn’t has a flat out NO yet! This way you do away w/all the dreamers over on C/L. Pretty smart actually.
I was talking to one of our bigger property managers the other day and it’s one of the reasons I feel inventory is going to skyrocket next spring. The word was about the end of October she had an avalanche of investors pile in her office to get their properties rented. Almost every one of them were pulling their properties off the market until “the market turns” next year (dream on). Most became irate when she informed them of going rates on rents and insisted on the price they wanted to get. She’s been turning them down and sending them packing. According to her, she can’t rent the ones she’s got, and recently started telling her agents to consider all offers potential renters throw at them. So it’s a buyers and a renters market all at the same time. Rentals are just standing still here. How long can you carry this load? Many breaking points next year for sure.
Another update: This week alone I’ve already handled calls from 4 different properties in foreclosure. All of them are unsalvageable.
Oh, and as for the A-hole that lumped me in with all the scam artists in his/her comments yesterday (you know who you are) you can go blow a goat you presumptuous dickhead! My hands and conscience are clean of pushing toxic loans. Trust me, I’ve lost a lot of money playin’ it straight.
Replying only to the first part of your reply…
In a downturn, for your area, what is the typical number of foreclosure properties you would handle?
Thanks in advance,
Neil
“Rent with option to buy” is not advisable in a declining market .
It use to be that people who wanted to tie up a house but just needed a little more time to save money for a down payment would pay a higher monthly rent and part would go toward the future down payment .
Now a rental contract with option to buy is just a device to get more money to the cash-strapped foreclosure bound flipper .
There is just no point in entering into a contract where you establish price now by the rent with option to buy when prices are going down ,unless of course you feel the market is going up .
There is also no point getting an option to buy from an FB because the bank has a priority interest that trumps your option.
“Recently, Susan Schuerman of central Phoenix bought a statue to help sell the home of her boyfriend’s son. The homeowner hasn’t reported a sale yet, but Schuerman isn’t discouraged. ‘He’s not living on the property, so maybe that makes a difference,’ she said.”
She bought the wrong one. The David Lereah action figure will never work.
But it would be fun to watch the dog take a dump on it. I really hate that man ya know…
I’d like to see the dog chew it up…head first!
So, you think a DL voodoo doll would be a hot seller on this blog?
Dude,
Sell it as a collection. I’ll take a DL and suzzane (of research fame).
Neil
If you can’t find the Lereah action figure, you can buy a Pinocchio doll as a substitute.
a buyer’s market is homes people can afford, not inventory numbers.
excellent point mr.law
Analyst Upgrade:
St Joseph upgraded from ‘religious symbol’ to ‘bubble savior’.
we’re looking at earnings of $2 per statue. apparently there is a shortage.
A shortage? Time to start buying them up and reselling them on Ebay. Maybe we can create a statue bubble!
Does anyone have reliable current for-sale inventory figures for PHX? I am thinking it is around 50K, but have not seen a recent update…
I can’t vouch for its reliability, but I get my numbers from http://www.housingtracker.net/askingprices/metro/Arizona/Phoenix-Mesa-Scottsdale/
Current inventory, as of 12/18, is 38,783 single family and condo units doe sale.
51,187 today according to ziprealty. Includes Maricopa and Pinal counties. It’s down somewhat from a month ago, no doubt due to people pulling places off the market over the holidays. It was close to 55,000 in early November. It will be an interesting number to track into the spring–anybody care to bet on 60,000 by April 1?
Here is the kit
http://www.stjosephstatue.com/kit.htm
So, what’s the difference between the 4″ and 8″ versions? Should I buy the 4″ if I have to sell a condo and the 8″ for McMansions? Or is there a guaranteed faster result if I ante up for the bigger, more expensive version? I guess I should ask my priest.
Yessiree! Comes complete w/protective plastic burying bag? WTF! Oh, I get it. That way you can dig it up and move it to your other embarrassing flip gone flop cross town?
The 4″ version is for those just getting use to the reaming. The 8″ version is for those who will be going to jail for fraud.
‘So, what’s the difference between the 4″ and 8″ versions?”
Cum on … Way too easy
Maybe the people at the church gift shops should remind these morons that, according to the Catholic faith, greed and gluttony are 2 of the 7 deadly sins. Why would St. Joe help some specuvestor?
“Listed in the same order used by both Pope Gregory the Great in the 6th Century AD and Dante Alighieri, the seven deadly sins are as follows: luxuria (extravagance, later lust), gula (gluttony), avaritia (avarice/greed), acedia (sloth), ira (wrath), invidia (envy), and superbia (pride/hubris).”
Looks like this bubble covers ‘em all.
If you have an ARM that is about to reset, you don’t want to mess around. You need the 8″ statue. Do they make an eight footer for the guy whose ARM has already reset?
“Sir… If this is your first time getting f’cked in the a$$ by your RE agent and mort broker, I’d go with the 4 incher. If you’ve had more than one f’cking and bought multiple houses, I’d strongly recommend the 8 incher for better fit. In the back, we also have a 12 inch model for FB’s in BK but that requires the KY option.”
Ummmm, 4 inches? Do I win something for getting it right?
I love the listings linked on the site. These aren’t “wishing” prices, they are “prayer” prices.
Who in the world is going to buy a house where someone is praying that they can get it sold at that price?
Great, something new to look for on the home inspection: A little patch of discolored lawn that looks like it was reset back in place, with the lawn blades going against the grain.
Or maybe the idiot FB forgot to replace the sod “green side up.”
I suspect the folks in the Asian plastic factory making millions of these little St. Joseph statue’s are shaking their heads and wondering what in the Sam Hill American’s are doing with all of them!!
St. Joseph is also the patron saint of dying people.
And people in doubt.
And pregnant women.
“They just want to get it (the plastic statue) and slink out again”
Damn that is funny! Kind of like a smut shop? As in “gosh I sure hope nobody sees my car parked here!”
Where’s the bravado? Where’s the multiple offers? These are the macho, devil may care buyers of 2005? Or is that 2004 now? Puhhhthetic.
Funny stuff! I liken the statue’s phenomena to stock brokers. If an underperforming stock broker makes great money/success for only 10% of their clients, those 10% will tell everyone they know. Read the testimonials from the statue website.
Priceless!
“The good news for consumers is if you want to buy a property and you want to buy a condo, today is a great time to do it because there’s a ton of them on the market,’ Bianchi said.”
Yes and I also want some of that avain flu stuff. I missed my chance last year.
what’s an activist ?
a useless person ” according to Walter Williams
Of course it is:
“‘The good news for consumers is if you want to buy a property and you want to buy a condo, today is a great time to do it because there’s a ton of them on the market,’ Bianchi said.”
Don’t get it . Houses are on the market . Houses have always been on the market . There are to many houses on the market now ,so why does that make it a good time to buy ? If you told me that houses are selling for 50% off 2005 peak ,now your talking about a good time to buy .
It isn’t a stable market ,foreclosures coming up will bring the market down ,so it’s not a good time to buy .
Stop trying to apply logic to this emotional decision.
The wife wants her choice of colors and sizes and if you shop NOW, you are sure to find something you like.
It’s Realtwhore speak. You just have to take all the operative words, and insert the opposite. Let me demonstrate:
“‘The good news for consumers is if you want to buy a property and you want to buy a condo, today is a great time to do it because there’s a ton of them on the market,’ Bianchi said.”
What it really says:
‘The bad news for sellers is if you want to sell a property and you want to sell a condo, today is a horrible time to do it because there’s a ton of them on the market.’
Today is a great time to catch a falling knife because there’s a ton of them on the market!
Fortune has projected that RE in McAllen-Mission, Texas (pop. 115,539) will go up by 8.50% in 2007 and 9.80% in 2008. A respectable 19% in two years (pretend it’s your primary residence and it’s tax-free!). If the the people in McAllen-Mission are smart, they’ll sell their $99,400 median priced houses to flippers and rent them back. In a year they can buy them back at an auction…..
With any kind of ‘immigration’ plan passed by Congress next year, that 19% would be a low ball number.
A true rental story. I’ve posted on the board a few times that I sold (my wife owned one and I owned one) 2 properties. One in West Hollywood and one in Northridge. We sold 3 years too early but I’m satisfied with the results because we had a large equity in both properties having owned them for a number of years.
We then began renting in Thousand Oaks, ca. However, because of the sudden surge in rental prices, I spoke to my landlord last week and asked if he was thinking of raising the rent next April when the lease is up. If he intended to bump the price up like some are around here (from $1700 to $2400 as one recently has) we would probably move out of southern california. Possibly even the country. He have an interesting response. He said, “Not unless you decide to move. If you move then I’ll probably will sell.”
Why this response from our landlord? Well, we pay the rent either on time or a few days before it’s due. If we have a small problem like a minor leak or the sprinkler system screws up, I fix it without calling him. The waste disposal went kaput so I went to Home Depot, bought one and installed it and sent him the bill for the unit. He was delighted to pay for it. In fact, even though he lives in Thousand Oaks, I have only seen him twice since April 2003. The point is, we are good renters. However, he told me he has had some renter horror stories since he bought this house 20 years ago. He told me about one renter he couldn’t get out who stopped paying the rent after 3 months. Another was a party animal and he was constantly getting complaints from neighbors and the parties that went on until 3 or 4 in the morning. Another didn’t clean the place or maintain the yard and walked away from his deposit. The roof had leaked and he hadn’t told the landlord and it caused some bad damage. Yet another never stopped calling him to get even the most minor thing fixed like a new fuse.
The point of this story is that my landlord said we will be his last renters and, in fact, he and his wife decided they would give renting the property one last chance (which was us) but since then they have decided to sell when we move anyway.
So, a lot of these fb’s who intend renting out their over-priced sh*t boxes with the intention of waiting until the market rebounds (good luck!) might end up getting more than they bargained for. I think we can add to the defaults quite a few absent landlords who bought on spec and will discover that a lot of renters are not who they say they are. For instance, a few absent lanlords who live in California, will end up being not too happy dealing with a problem renter in Nevada or Arizona or Florida. That’s a long way to travel to say nothing of expensive if the renter stops paying or runs the property down. Welcome to another glich in the property boom and bust.
Mike,
A very telling tale. Years past, I was a real estate broker with my own office (quit under Paul Volker’s 16% rate).
I had a few properties under management. We had a saying:
“you never really know someone until you marry them, or until you rent to them”. I will never forget that!
I still remember a co-worker back in the 70’s or 80’s who was a SFH landlord, and he practically had a nervous breakdown (seriously) over the problems his tenant- and the tenant-friendly laws in Maryland- were giving him.
Check this out! I wonder how we could spend more than we make. HELOC’s perhaps?
Americans spend every cent - and more
Critics say America’s negative savings rate can’t be sustained and see a recession coming. Are they right?
http://money.cnn.com/2006/12/21/news/economy/savings_rate/index.htm?cnn=yes
What sheeple dont get and the real estate clerks dont want them to get is …
) it turns into a sellers market.
The instant you buy a freaking house, you’re not a buyer any more and its not your market any more.
Its a buyers market, and it only makes sense buying in a buyers market the instant before ( OK who can time it that well, but soon after … say 1-2 days
Remember, they say its a great time to buy a house, they aren’t saying its a great time to flip a house. Call them and ask if its a good time to flip. if they say yes, tell them that you’d buy this contingent upon selling the other one which is about 2X this one in price. See how fast they run.
Cool.
Cow_tipping.
What I want to know is; if so many realtors have convinced sellers to “relist in the spring” what will happen to the relationship between sellers and their brokers if all hell breaks loose on the inventory issue?
You’ve “used your expertise” to help lighten up the inventory in the market (likely from guidance “above” the NAR). Then this comes back and SMACKS you right in the face. You lose the confidence of ALL your sellers and all of your credibility.
And what if you find out that, while you’ve been counseling your sellers to “wait till spring” you find out your boss (or people in NAR like Liareh) have used the window of opportunity to dump their properties?
Might be a bit of turmoil in the entire RE business come spring.
“‘Back when the market was hot and you were practically interviewing people to see if you wanted to sell them your house, it was a different story,’ Gibson said. ‘St. Joseph is their last desperate attempt to get the house sold.’”
My oh my, have times changed. No more smugness, huh! Interviewing potential buyers, or as some have pointed out, having potential buyers write letters about why they should be the ones buying the house. Now you have to slink into the store as if going to some smut shop. Well, as they say, “What goes around, comes around.”
All I can say is that this is one wacky, helluva, crazy housing bubble that is going to leave the largest bazooka bubble mess all over many people’s faces when it is all over. I have a feeling very few us, even on this board, will emerge unscathed, even if all it is just knowing someone else (family member, maybe) who gets toasted in the coming crash.
Agreed. “even if its knowing someone”….that’s why I believe this RE “correction” is going to leave big footprints.
Forget about the dollars involved, I think the psychological impact of so many people getting HAMMERED may be dramatic.
The impact of just about every homeowner seeing a lot of their “gains” go up in smoke is going to be traumatic for many people.
With the savings rate negative in this country over the last few years and the dotcom meltdown still fresh in most people’s memories I just don’t see how this latest debacle cannot have a lasting effect. They say people remember pain twice as much pleasure. I gotta believe this pain is going to be widespread, deep and unforgettable.
I am currently renting an apartment/condo in scottsdale for $910/month. its a 2bed/2bath with a 2 car garage. my neighboor owns hers and she pays 1500/month plus 300 in hoa fees. needless to say…. i think that i got the better deal but she “owns”
Meanwhile, the Tucson REIC spin machine continues playing Happy Talk:
http://www.azstarnet.com/business/161310
Speaking of Tucson, twist over at housingdoom had an excellent post today. It’s basically a realtor’s diary. Here’s my favorite quote, he says it after a laundry list of bad RE news:
I think the real question is, when has it been a bad time to buy real estate in Tucson, Arizona?
anyone wanna guess his answer?
http://housingdoom.com/2006/12/21/tucson-housing-diary/
Some realtors are trying hard to be straight shooters. Others end up being informative in spite of themselves.
Here’s an update on Maricopa County notices of trustee’s sales.
couple of comments -
one, if you have to have to rely on a plastic statue to sell your property, then you’re sadly clueless about the state of the market, and you need to fire your agent.
two, the rental market in phoenix is going gang-busters. i just this week listed and re-rented 2 of my long-term investment properties on craigslist. i had 9 responses in one day. i could have been greedy and raised the rents, but i prefer quick, solid deals, and no disruption of cash flow. granted, these are nice units in a very nice area. still, most of the apartments in north central phoenix (around the pointe) seemed to have gone condo, so there is a shortage of rental property. the people that need to rent empty houses in queen creek or avondale are screwed. they are a dime a dozen.
The scenario is likely to be many times larger than the dot.com bust. Many more are in RE. I agree with the big bazooka comments. I have been watching this market for years. I am a renter and have remained so. I have always been able to rent in high net worth desirable areas but could never afford to buy, even if I got renters/housemates. I didn’t want to buy because it would have been a move down. Glad I’m renting.
I shorted the hell out of the NASDAQ after the bust.
Whoever posted that Cramer link, thanks, that was highly revealing because I know that’s how the corrupted rigged market works but not one has said so in one place, in one interview, except maybe NEY in his books written years ago. That’s one hell of an interview.
This is going to be one nasty depression.
The RE is topping out / topped out. The housing index topped out August 2005 exactly when our shrewd host sold out.
Most have re-financed many times and spent the equity on soft consumer items. Some are maxed out on teh re-fi’s and in debt on credit cards.
I live in central costal CA and many many people have not worked in years. YEARS. They have been living on equity.
Now some of them are maxed out on credit cards too, one friend is 70k in credit card debt and maxed out on re-fi’s on two houses.
Okay, so many folks have no jobs. When the lines of credit are cut off and spent and they have no jobs, — it’s going to be all hell.
What I have briefly described is not unusual. It’s pretty common.