Speculators “Bought Too Many, Paid Too Much”: Arizona
The December numbers are out for the Phoenix area in Arizona. “With 4,620 sales recorded in December, the 2006 Greater Phoenix resale home market continued to slow, with 5,040 sales in November 2006, and 6,480 sales for a year ago. This is the lowest level of activity for 2006 and the lowest for December since 4,785 sales were recorded in 2000. For 2006, a total to 67,035 sales were recorded, in contrast to 110,835 sales for 2005 and 102,115 recordings for 2004.”
“Sales activity declined 40 percent. While this is another record year, the median price has been steadily declining during the year from $267,000 in June to $255,900 in December, which is the lowest median price since $255,000 was reported in July 2005.”
“The rapid growth of sales activity and prices of the last few years has been due largely to the ever-increasing involvement of investors in the market. Thus, the slowdown in the investor market can be a relevant reason for the overall market slowdown and the increase in trouble properties. Many investors have found it increasingly difficult to rent and are trying to sell their homes before they lose them to foreclosure or to sell them to lock in any appreciation.”
“Another source of trouble properties are those households, in anticipation of continued appreciation, that bought more home than they could afford and probably used non-traditional financing to acquire it. Thus, confronting financial issues, these households are trying to sell in order to obtain some appreciation and/or to avoid foreclosure.”
“‘Thus, many of the market issues of 2006 and potentially 2007 can be attributed to individuals, trying to secure their futures, who got emotionally involved through believing in constant success and appreciation,’ said Jay Butler, director of Realty Studies at Arizona State University.”
The Arizona Republic. “Metropolitan Phoenix’s resale housing market finished 2006 with a whimper, capping a tumultuous year in which the region struggled to regain its footing after a buying frenzy driven by speculators. A report shows sales on existing homes in December were the worst for the entire year.”
“Experts blame investors, many of whom fled the Valley, leaving a glut of housing behind. Single-family resale inventory stands at more than 42,000, nearly double that of 2005. ‘They were the driving force,’ said Jay Butler. ‘They were the ones who would pay any price for a home.’”
“Ben Sage of Metrostudy said the big theme of last year was the changing expectations. ‘It was a major turnaround from the previous year, and the major disconnect now is between buyers and sellers over listing prices and what homes are selling for,’ he said.”
“‘I couldn’t wait for 2006 to be over,’ said (realtor) Bridgette Gavagan in the West Valley. ‘It was a very negative year. Three years ago, buyers bought homes to live in, to love them and to raise families and to be there. They weren’t buying it to double their money in six months.’”
“Ken Udenze initially listed his south Chandler home for $910,000 in April and has cut the price to around $830,000. He said he has learned to discount some of the optimism he heard about getting top prices and made realistic decisions to cut.”
“‘You have to move ahead of the market,’ he said. ‘It can be hard to do that but it’s what you have to do. Why is a house different from a stock when it comes time to sell it, when you know what the market is going to pay for it? You have to detach yourself from it and be a little bit objective.’”
“There’s still a lot of excess supply that must be sold before the market can recover. ‘The market is clogged by people who are just testing the market to see if they can get top dollar,’ said (broker) Margie O’Campo de Castillo in Phoenix. ‘The other part of the market is people in dire straits. They got into possibly not the right loans for them.’”
“Prices have been falling in recent months according to the newly renamed Realty Studies center at Arizona State University. Jay Butler expects prices to keep dropping in some areas this year, especially those where a lot of investors bought homes in 2004 and 2005 and where new homes are competing.”
“In 2006, sales dropped 57 percent to 1,055 in Ahwatukee Foothills; 41 percent to 4,625 in Chandler; 44 percent to 3,730 in Gilbert; 42 percent to 7,600 in Mesa and 32 percent to 1,785 in Tempe.”
“Sales of existing Scottsdale homes dropped 40 percent in 2006 from the previous year while the median price edged up. Scottsdale Realtor Mark Tait said Scottsdale’s median price increase is misleading because it is skewed upward by luxury home buyers.”
“‘The luxury market is as strong as ever,’ Tait said, adding that prices dropped in other price spectrums and buyer traffic is off considerably. Tait said he rented out a remodeled home he owns near downtown because it would not sell at $425,000.”
The East Valley Tribune. “After flooding the market and driving up prices in recent years, investors now trying to unload properties likely contributed significantly to the market slowdown, Realty Studies director Jay Butler said.”
“‘People would like to see that hypermarket come back but realize it’s not going to,’ Butler said.”
“Some areas are seeing declining prices, and foreclosures are expected to rise this year. Many of the homes facing foreclosure will likely belong to investors, Butler said. ‘They bought too many. They paid too much,’ he said.”
This is definitely the most bearish language coming out of the ASU department since I have been following it. They used to just mention the risky loans, and now they dwell on the coming foreclosures.
‘Oro Valley officials estimate there will be only about half as much new home construction in the town during this fiscal year as they had originally anticipated, but industry experts say the town staff shouldn’t have predicted an upswing in the first place. Oro Valley will issue 43 percent fewer residential building permits this fiscal year.
‘Town staffers say they have been aware that the housing market slowdown the region is seeing would someday happen. ‘The town as a whole has known in our long-term financial planning that someday we would have to deal with a slow-down of growth,’ said Town Manager David Andrews. ‘It happened earlier and sooner than we thought it would,’ he said.’
‘Oro Valley relies so heavily on construction-related revenues that any diversion from targeted amounts has a significant affect, Lemos said.
‘You get a down year like this has been, it really impacts the revenue going into the general fund,’ she said.’
‘Arson investigators suspect a person intentionally set two separate fires that broke out within minutes of each other early Tuesday, destroying two buildings under construction. A two-story, four unit condominium building and a 1,600-square-foot home, both in the framing stage, were torched, said Larry Tunforss, a spokesman for the Bullhead City Fire Department.’
‘These are all homes under construction that apparently someone didn’t like — we have no idea why or who,’ Tunforss said. ‘You have no electricity hooked up, no gas hooked up, no reason for a new building to burn.’
The annual sales decline are stunning ~ 40 pct. Did Jay Butler stumble onto this Blog OR was it an epiphany? Price declines and recession/depression are pretty much baked.
You know what’s scary? The same thing is happening in Europe, Canada, the UK and in many many many places too small to talk about. God I hate bankers. It’s nice to talk about personal responsabilities, but someone handsomely profited from this mega worldwide bubble. Bastard bankers. It’s too prevalent worldwide to not puke on this dirty profession called banker. I hate them.
Fractional Reserve Banking is a fraud. Bankers take your money and lend it out to others. What other business takes your property and lends it to others? This is a fraud.
Stockbrokers do. Unless you segregate it in a cash account and prohibit lending to short sellers. They even charge the shorts a bunch of money to borrow YOUR shares.
And most stockbrokers are controlled by fricken banks.
Good point txchick,
But at least they cannot create more shares.
Look up “Naked Shorting”
You can set your broker account up so your shares can’t be borrowed. Some brokers will pay you part of the “rebate” if you set it to allow borrowing.
Uh, ginster, if a bank doesn’t lend your money “to others” exactly how is it going to earn money to pay you interest?
A bank can indeed lend your money to others without committing fraud, but only if it doesn’t allow you to withdraw the money during the term of the loan, and only if the money they lend is not more than the amount that you deposited. Of course, neither of these rules is observed at present, because they aren’t nearly as profitable for the banks as lending out money they made up out of thin air, and they can get away with doing so.
Tell us how you feel and don’t sugar coat it.
I agree with you that marketing loans to folks you know can’t pay is awful. The banks essentially rely on knowing that there is a huge population of people who are financially illiterate. My pet peeve are payday cash advance outfits. Talk about preying on the poor. The apr on these loans are astronomical and they are perfectly legal. Doesn’t make it right though.
“Caveat emptor.” like the Romans said. It means “May the buyer beware.” Caveat for these stupid borrowers.
Spreading the stinky stuff around is what helps make things grow. Much of the abuse might be avoided by simple disclosure rules. It is the nature of the banking trade that the entire market must follow the line which always ends up operating the at lowest possible level.
Bankers only give the proles what they want.
Is a gun pointed at their heads when they take out a $300k mortgage and their wages are $20k a year?
Oh, they were too stupid to read the loan docs? Or too lazy to read the loans docs? Or too greedy to care because the price of the house would inflate and they’d be rich?
or
Proles are too stupid to understand how debt works? Or too lazy to research it? Or too greedy to care, because they’ll get theirs?
Stupid, lazy, greedy proles vs bankers who only give them what they want - ‘free money.’
I don’t like bankers either - but the stupid, lazy, greedy proles are much worse.
Help me with this one……
With new building permits tanking, won’t that expedite liquidation of excess inventory and hasten a return to supply and demand?
More inventory = more downward pricing
What am I missing?????
Who the hell will be buying and with what money ? The world is supposed to be drowning in liquidity ?
Dan,
I believe a reduction in new building permits is a lagging indicator. There are still thousands of homes being built ir ready to be built. The horse has left the barn.
Shoot the horse.
Thanks…..
I’ve been trying to keep up, sort of, with the “months of inventory” in several areas.
Does this guy qualify for “DUMBSHITof the Year”? He gets my vote.
http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/ScrapingByOn150000AYear.aspx
$150,000 yr and can’t get by? Trying to make empty rentals work? Never considered selling the moneypits? I would love to hear more opinions. (article was on msn.com)
150 a year in elkhorn nebraska and struggling. I am at a loss for words.
About half the people I know earning 150k a year (or more) are struggling. (For the most part, they bought overpriced homes.) The other half of the people I know earning that wage either bought prior to the current bubble (in the 1990’s, I consider 2000+ bubble prices) or rent. This 2nd half are living well no matter where they live and have great savings.
I read somewhere that 40% of the wealth of the “affluent” is in speculative real estate. Wow! Let’s see, since real estate is a leverage investment… It doesn’t mean the losses stop when the net return hits zero. Awwww…
Neil
I am gonna go out on a limb and bet that you dont live in elkhorn Nebraska. If you did half the people you know making 150k or more would probably = 1
Some people will never get it together. They simply don’t have the capacity. Even with a million bucks a year they would not be able to afford an affluent lifestyle!
Good point. I hope they get it on the chin.
“150K a year in elkhorn nebraska and struggling. I am at a loss for words.”
And, apparently, up until last summer the combined income was 232K/year. Plus bonuses up to 24K.
“150 a year in elkhorn nebraska and struggling”
But they lost the husbands $100k…so they are living at a 1/4 million dollar level. what is it that compels people to spend every last dime? I stand in jaw dropping awe of the stupidity…And the lady is a shrink. I’d be lining up for an appoint ment with her.
Honey I shrank the shrink. You didn’t know? Most shrinks are crazy. Non. All shrinks are crazy. It comes with the territory.
I hate articles written like that. Let’s lead up to the “surprise” ending where the important information is at the end. Yeah, they’ve cut everything “to the bone”, but they own no less than 3 houses. What??
The total avoidance of discussing the real issue (3 mortgage payments) also only confirms my rather negative opinion of mental health professionals.
My SIL is a family counselor. I check her methods of handling her kids and family against my own life. If I’m doing the opposite, I’m probably doing something right.
(Apologies to the sane mental health professionals out there - I know there’s some some were out there…right??)
I hate articles like this where the reporter just takes it for granted that the family, despite all their tough economizing, simply cannot make ends meet making $150K. Then you get down to the end of the article, and find out, despite all their “economizing” (maybe cutting out a Starbucks latte or two), they just got a HORSE for their girls which they “think” will cost a “few hundred dollars a month” (true sign of idiots who are inept with finances … they give vague estimations of significant expenses) …. I am so sick of whiney, high-income people complaining because they cannot live on a six-figure income (in a place like Nebraska, no less), yet have to have a horse for their little girls, or ballet/gymnastics classes, or a big-screen plasma tv, or three negative cashflow rental properties, etc……
I’m training to be a psych, and, yep, most of us are crazy.
Amy needs to have her head examined,….Doctor heal thyself!
Amy is not alone. Start with the people at the FED and Alan Grenspan, that f–cken monster.
My opinion……… they need to sell their investment properties.
You can make good money and still be rather stupid when it comes to investing.
“A closer look at the Schuetts’ finances reveals, for example, that a big chunk of their income is eaten up by two rental properties. Brian purchased them thinking they’d generate extra income, but he has yet to find tenants. Even when the properties are finally occupied, the area’s softening rental market probably won’t allow them to make enough to cover carrying costs.”
My opinion … They also need to get rid of the pet HORSE that’s costing them “a few hundred dollars” a month.
Ans make steak with it. Horse is excellent red meat and it’s good for your health. Yum yum. Nothing better that horse meat.
Agreed. It’s a little sweeter than beef.
horses cannot be kept for less than $350 / each per month. I have done all the math and that’s the bottom. that doesn’t include tack, shows, trailering / trucking, showing, lessons, clothing, (…and on and on and on and on…)
horses are a lifestyle not a hobby.
Mina
Bah eat it.
“My opinion……… they need to sell their investment properties.”
The word “investment” has lost truly lost its meaning.
That would make sense in Manhattan…. but Omaha?
Warren Buffett will buy it.
Two vacant rentals and an extra horse……
But, they are going to cut their expenses by dropping the $3/mo charge for an unlisted number.
LOL - My thoughts exactly … Penny wise and pound foolish. Yet the reporter does not question the family’s supposed efforts to economize.
Lovely - I missed part about the horse. LOL - I agree with you TG, there are days I just don’t understand how journalists can write this garbage with a straight face.
I’ll betcha that the journalist that wrote the article is “struggling”, too. (I’ve cut out the lattes - what else can be the problem?? It can’t be any of the hugely expensive items I’ve bought recently….)
Because journalist just love garbage. Boy you are slow to understand. Now tonight open your TV a couple of hours and listen to the crap at CNBC, MNBC, CBC, CTV, FOXck TV. Journalists are also responsible for all the shhittt going on. The media lives and thrives on bullshhit, journalists in particular.
They need to switch to powered milk. Real milk is horribly expensive. Also constantly remind their young daughter to:
“SWITCH OF THE DAMN LIGHTS WHEN YOUR’E NOT IN THE ROOM!!!! ….DO YOU THINK DADDY OWNS THE ELECTRIC COMPANY!!!!!”
Little things like this are BIG savers while you are busy trying to pay on your brilliant investments.
I got more if anyone needs em.
Milk laced with arsenic or mercury is real tasty.
Sell the kids and the wife and keep the horse.
The wife makes all the money. I suggest she dump the husband and the horse. Oh — and those houses.
So sad, they are also cutting things like weekly dates, stop investing in your marriage, invest in depreciating real estate instead.
The reason they don’t sell the houses is that they would have to admit their foolishness and pride goes before the fall.
Since the rentals are vacant, pehaps they can put the horse in one of them to save stable fees.
Well. He can go to work on his horse and return the car to the Ford dealership.
Maybe she can depreciate the husband?
From the subprime mortgage implosion front, I just heard that Decision One has annouced to their employees that their Tampa office is closing down. I have no further information about additional D1 offices.
Ha! That’s why it’s called Decision One. If you worked in the Tampa office there is no Decision Two!
Ha! They’ll just change their name to: 1st New Decision
Or Fifth Third Decision.
Thanks!
This lady deserves credit for thriftiness and making do herself.
http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/SurvivingAndThrivingOn12000AYear.aspx
Her attitude is highly recommended for everyone in this country in this day and age. Man, if everyone thought like her! I am not saying replicate everything, but just her attitude and then put into practice in your own way in your own life, what an impact that would have. Oh well, I have to go over to Starbucks to get another $7.50 latte grande and pick up the latest Danielle Steele hardback for $30.
She sounds a lot like me, for the first 35 years of my life…;-) Kudos to her - if only more people cared less for ’store bought’ or ‘new’ or ‘exclusive/etite/status’, the US would be in a better place now.
My first apartments were completly furnished from dumpster diving, jumble sales, second-hand stalls and sifting through Oxfam (the UK equivalent of Goodwill). A lick of paint and a few nails for repair and few could tell where they came from. Wierldy enough, when I left the UK for Los Angeles in 2000, I sold all of my large pieces of furniture - much of it for more that I paid for it! Some of the pieces (like my desk) had been with me since my early 20’s, so I’d had a lot of use out of them and still managed to make a profit.
The only thing I could suggest for her to save more money is to start growing her own vegetables - even if she doesn’t have any outside space, things like tomatoes, peppers and even potatoes can be grown in bags placed near windows. I haven’t bought fresh herbs in years, because I grow my favourite 5 or 6 in little pots on the windowsill above the sink.
Anyway, I know I’m a freak
Especially surrounded by affluent Angelinos, who think that things only have true ‘value’ if they pay an arm and a leg for it.
I used to think people who went to thrift stores were freaks — until my wife scored a 1922 Hickory Chair dresser at Salvation Army for $100. Similar ones in worse condition sell on eBay for $1,000 and up.
The saddest part is that she and the other woman in the other article (making $6.50 an hour) are 48 and 52 years old. This is an age when you are supposed to be at your peak in earnings. How can you put money away for retirement when you are barely scraping by?
Too bad there is no housing screen lotion to prevent the people in the Valley of the Sun from getting burned in the collapse of the Great Housing Bubble. The barrio is getting bigger every day.
“Let them eat cactus.”
“no reason for a new building to burn”…
Sounds like the catchwords for saying arson, pussyfooting around a bit~
Irak building you mean.
“Why is a house different from a stock when it comes time to sell it”
Good question, Ken. Let’s see….
TRANSACTION COSTS! I can sell 5000sh of a stock for $7. Try selling a house for that much.
VALUATION UNCERTAINTY! I have 100sh of security XYZ. If some other chump has 100sh of XYZ they are worth exactly the same amount as mine are, at the same instant in time. RE doesn’t work that way.
TRANACTION TIMEFRAME! If I want to sell a stock I can do it in a second. If I decide I want to sell a property using traditional channels it will takes months and perhaps years…
Good post! Two years ago I would have just heard a bunch of raucous laughter from the RE specuvesters making fun of me for not buying. And the funny thing is, some of them said I will change my mind and buy RE at the top! Well I only have a $12,000 timeshare, which I bought in 2005. Like gee whiz, that’s going to put me into the poor house! NOT!
Yep… well said.
One thing you also forgot. Holding costs. It costs me $25/year to maintain my brokerage acount if I do not trade. Zzzzzz… There is a reason investment properties are called alligators…
Another bit of difference is the cost of information (you called this VALUATION UNCERTAINTY). Its very easy to find out what the current trading value of a stock is. Its free on dozens of web sites. The REIC has done a good job of obscuring that information.
Neil
What’s new. Bastards. And the bullshhitters will call it Free Markets and all that crap.
Of course, how could I forget, CARRYING COSTS. Stocks I hold pay dividends, so carrying costs are rewards in the case of stocks.
What dividends?
Most of the stocks pay microscopic dividends.
Some exceptions in energy and utilities.
But dividends are mostly a joke.
Energy, Commodities, Financial Services, some manufacturing (aircraft BA for one)… lots of sectors pay respectable dividends. Nice tax treatment too! Since the NASD bust I have been moving to dividend paying stocks. Stocks that pay dividends outperform their less generous counterparts by a wide margin when total return is used as a measure…
Me too. And it saved me a lot of trouble and anguish.
Related to your second and third points is liquidity. When you sell a stock you know exactly what price you are going to get at any time. Not so with RE.
To be balanced, and yes I’m extremely bearish on real estate at this time, depending on how long you hold your stocks / homes, there are differnet capital tax treatments.
I looked up Ken’s listing. He’s down to $765K (the exact amount of the Zillow estimate!). From the Maricopa Recorder’s site, it appears Ken might be having some cash-flow issues and took out a $250K HELOC at the end of December. Good luck Ken!
Wow, even a REALTOR says they paid too much, be still my heart… OT, Anyone know when the florida statistics will be released? it seems we get them later and later every month.
If you are talking about Butler, I believe he’s an economist at ASU.
I’ve never understood why a University compiles these numbers and not the local MLS.
ah, Realty studies.. not realtor. still pretty strong words.
Phoenix is mostly a real estate based economy. Could you paying for a degree in “Realty Studies”? This $40,000 bachelor’s degree gives you the ability to become a Realtor!! Oh wait, so does being a homemaker.
Should say: “Could you imagine…”
I’ve never understood why a University compiles these numbers and not the local MLS.
Well, a Univeristy has no stake in the outcome and exists (in theory) to encourage diligent research and independent critical thought, none of which describe any given set of Realtors™.
Wasn’t there some podunk realtor association a few days back that announced it would stop releasing price data becuase it didn’t like what it showed? What about the California AR changing the definition of affordability? And so on.
First ask the question: who is funding the research. This is called following the money.
They who are paying the university for the research are they on whose behalf the results are delivered.
“‘Although new contracts on a gross basis reached 953 homes for the quarter, the impact of our 63% cancellation rate resulted in new contracts declining 61% for the quarter and year-end backlog units declining 46% compared to December 31, 2005.’”
***********************************************************
So what happens to its stock when M/I Homes, Inc. reports such dismal news? Down sharply one would think. But not while the Plunge Protection Team is on duty. As of 11:11am, MHO was UP.”
————————————————
I see the “Plunge Protection Team” come up increasingly often. Now I agree that the market does not make sense and I am pretty into conspiracy theories (they are fun, I know the secret), but could someone explain to me how the mechanics work for propping up the market? And wouldn’t any broker that has a brain be able to detect such activity?
Has anyone looked at Zip Reality inventory for Phoenix today? Yesterday it broke 50K at 50,076. As of noon today the number jumped 535 houses to 50,611! WOW!! I’m telling you guys it will be 60K by the end of January.
The elderly lady that lives across the street has dropped her price from 215K to 198K. I guess God hasn’t found her a buyer yet. I told her to keep praying.
What happened to that female golfing partner you had?
i thought it was 54k in August of last summer. So at 50k, does that mean things are brighter for Phoenix?
Inventory has dropped in my local zip codes. Maybe some improvement?…or people took them off the market until prices rebound (ha ha!)
A
B
“I told her to keep praying”
Tell her to buy a St Joseph Statue and $hove it up her a$$!
He’s not the patron saint of hookers!
Head or feet first? I read somewhere that could be of some importance.
Oh Crispy how could you? and to a poor little elderly lady? For shame, Crispy for shame!
LMAO
Or sell her soul to the devil. Apparently it works better when it comes to money matter. The Devil is better businessman than Saint-Joseph. “SIgn here your 1000 year mortgage.”
Does Bayer still make St. Joseph aspirin for children?
Maybe FBs can bury little pink pills in their yard and it will work better for them.
St. Joseph himself told me that everyone who buried him upside down - anywhere- can go scratch!
(that’s how Saints talk. They never use the “F” word.)
At least if you had oil underneath. No water. No oil. You should give back Arizona to Mexico.:)
60,000 houses in the middle of the desert. Wow what a fine proposition for a mega crash. Better let the Mexicans come in.
General Sherman said in the 1850s that having just fought a war with Mexico to make them give us Arizona, we should fight another one to make them take it back.
Arizona has some beautiful areas like the Grand Canyon. The drive from Flagstaff to Phoenix is also amazing with canyons, plateaus and mountains. Of course some people prefer the concrete mountains of NYC or LA with indoor plants.
As soon as the English give Northern Ireland back to the Irish, and Scotland back to the Scots and take their people back from Australia, New Zealand and Africa.
Why stop there? Make the Anglo-Saxon English move back to Germany. Make the Germans, the Hungarians, and the northern Indians move back to central Asia. Kick the Arabs out of North Africa and send them back to the Arabian Peninsula. Send the Madagascar…enes? ites?…back to Indonesia. Hell, make everybody go back to Olduvai Gorge.
Don’t forget that the Native Americans have to go back to Asia and the Romanians must go back to Italy.
It’s getting ugly around here. Two new houses in out relatively small neighborhood went up for sale this week despite the fact that NOTHING is moving. One house on our street is lender owned after the bank foreclosed on the family there in December. Another neighbor of mine will certainly follow as he currently has two liens on his property, has already declared bankruptcy once, and has had a Notice of Trustee’s Sale that was cancelled. He currently has over a half million in adjustable rate debt. I can think of at least three other people on my street who are in nearly as bad shape. 2007 is shaping up to be very interesting…
“Ken Udenze initially listed his south Chandler home for $910,000 in April and has cut the price to around $830,000. He said he has learned to discount some of the optimism he heard about getting top prices and made realistic decisions to cut.”
“‘You have to move ahead of the market,’ he said….”
I expect a lot of sellers to move ahead of the market this Spring.
Arizona folks: is there anything in Chandler worth that kind of money? Why would you pay that in Chandler vs. Scottsdale or Cave Creek or somewhere more interesting? My recollection was that Chandler was just another tract home farm.
Tx, there are some high tech companies in Chandler, notably Intel, which employs thousands. Well thousands minus the couple hundred or so laid off. The Chandler Mall area is not so bad. Believe it or not, there are a few “upscale” places. We would go to “My Fat Greek Restaurant,” which has great food. But otherwise it’s a tract home farm, nothing exciting like old town Scottsdale where there are some fun bars.
txchick,
1. No.
2. It’s the “mink and manure” crowd…folks that sold the family farm, then turn around and build/buy the most ridiculous McMansions you can imagine in the same area. Trying to make the area their “own” Scottsdale/La Jolla/Sedona.
And yes, it’s a tract home farm…acres and acres of stucco homes with tile roofs as far as the eye can see.
Chandler/Gilbert/Queen Creek USED to be bucolic-like back in the day, pre late 70s. Gorgeous farmland, quiet, perfect for families, good schools, you could buy a terrific 4000 sq ft. rambling ranch house on a few acres for less than $100K….
Yea, that was my recollection of the place. Unbelieveable.
No. Si! Eso incredibile ! See spanish is real easy.
Everyone (rightfully) makes fun of all the sh#t boxes in LA for 900K, but gawd at least it’s not 120 degrees. There is not a house in Phoenix that is worth 900k period. 100k, ok I could put up with a little heat.
I’m with you, imploder. Phoenix would make Dante proud.
I do have a friend, however, who’s figured it out. He’s a teacher, and, come summer, he goes on a two and a half month odyssey — LA, SF, Seattle.
There are a few Giant homes on large properties in Chandler left over from the farming days. Hard to see them because the place is so flat. Chandler is old farm new industrial. I work in Chandler next to a old tar place that smells like… well tar. Next to a private Christian school and railroad line. And a big INTEL foundary. Who would want to live next to one of those things? Toxic HF hydrofluoric acid.
People live here becasue of the work, pretty is up north AZ or down South. This is like the San Fernando valley in Cali but bigger and not as crowded, and hotter.
I have to chime in here because I lived in Chandler for two years. I, personally, hate the entire Phoenix area. To list every reason would use up Ben’s entire bandwidth, so I will keep it at a minimum. Hot, ugly, no culture, hell on earth.
But, if the blast furnace is your cup of tea, I think Chandler is actually one of the best areas to live. Contrary to what many say, there are some very nice homes and neighborhoods (again if your into that stucco sh!tbox thing) around there. Ocotillo, etc. And the schools are better than most in the valley. Hence, it is a good place for families. If I were going to raise a family there (zero chance) I would choose Chandler, if not, Paradise Valley (if I remember correctly) or maybe Scottsdale. Just my two cents.
JMO, but I love it here. You’re 100% right about the lack of culture and how ugly it is, but I can’t stand cold weather and I don’t mind 100 degrees at all. No digging my car out of three feet of snow, and no replacing my car every few years because the salt on the roads has corroded it. I’ve never been in sub-zero weather in my entire life and I never hope to have to either. But heym whatever floats you boat.
I am somewhat familiar with and liked Chandler as I had a Beazer home built in 2004 and then sold in 2006 near Cooper and Riggs. I signed up to have the house (5400 sq. ft on 1/2 acre) built by Beazer in Feb. 2004. This was just before things went crazy there and the lines started forming outside the builders to get your name in the hat for the lottery on the houses. At the time of purchase for $440,000, in the back of my mind all I could think is “I hope the housing doesn’t go bust. I was thinking that at that price it had to be at the top.
I purchased the house with 20% down on a 5/1 arm at 4.75%. The ARM made me nervous as well.
I moved into my house Dec. 2004, and in July of 2005, a neighbor put his similiar model house up for sale for $950,000. I told my wife at that point that we are out of here if that house sells. The guy got 910,000 for the house from some californian that did move into the house. I don’t know the terms, but I think that some creative financing was used as the contract price according to the MLS was 930,000, but the recorded price was 910,000.
The house closed in Aug. or Sept. of 2005. I put my house on the market in Oct for 899,000. My backyard was not finished like theirs so the lower price. I almost had it sold to an “investor” friend for 825,000 in Feb. 2006. At the time I had no idea about the “toxic” loans he was using. Finally sold it in June of 2006 for $705,000. I took what I could get after lowering the price to $750,000 by April.
I hadn’t discovered this blog until much later when Ben was featured on CNN. I was looking for a house in Colorado Springs in summer of 2006 and saw the inventory building and thought I should just wait. I had moved to Oregon temporarily, then to Colorado Springs for the fall and now I am back in Oregon renting - thanks to the great advice from the posters on this site.
The house I am renting for $1500 a month is in a neighborhood where 3 houses in a row of the same model just went on the market. 2 of the houses are being sold because of job transfers and the other one I don’t know the reason. The wishing prices right now are 419,000, 400,000 390,000. Sure doesn’t pay to buy and rent out for retirement.
Do you miss the Beazer granite counters?
C’mon, fess up: you’d give back every last cent of that $265,000 profit just to rest your coffee cup on that granite countertop…one last time.
There are nice homes in parts of Chandler. Check out the homes just northwest of Kyrene and Ray, for example (just north of Orchid Lane). Or just east of Mill Ave. on the south side of Ray. (Though those are obviously unusual, extreme cases…)
“‘You have to move ahead of the market,’ he said…
‘But unfortunately I am unable to practice what I preach.’ “
Here’s Ken’s house:
http://www.maricopa.gov/Assessor/ParcelApplication/Detail.aspx?ID=303-58-164
He paid $412K in 2003. Now he’s trying to double his money. Good luck with that, Ken!
Oops! Forgot to mention that Ken has a $330K ARM and a $250K HELOC, so he can’t go much lower. Can someone here help him out?
Unless I’m mistaken, the $$$ value of a HELOC is established at origination time. That doesn’t necessarily mean the entire line has been used… yet.
True, but if Ken was really sitting on a half million in equity, don’t you think he would have come down in price a bit more than $80K in almost a year?
Ken’s screwed. He thinks he “gets it” but clearly he doesn’t.
Hey Ken. Sales are down 40%. “Cutting” your price a mere 10% isn’t going to…cut it.
“Ken Udenze initially listed his south Chandler home for $910,000 in April and has cut the price to around $830,000.”
So lets see, he owned the place for less than three years when he put it on the market for $500,000 more than he paid for it. If anyone buys at this absurd price, the new owner should be deemed one of the greatest fools on the planet.
“Experts blame investors, many of whom fled the Valley, leaving a glut of housing behind.
2004
Experts thank investors for the huge runup in prices and incredible demand for more homes.
I never did see that second news story in 2004 wonder why?
I saw this in 2004 though:
Tom Cruise watching Dawson Creek and Sabrina the Teenage Witch episodes. Expects to select one of the female leads and marry her, with or without her parents’ permission, before 2006 ends.
“‘I couldn’t wait for 2006 to be over,’ said (realtor) Bridgette Gavagan in the West Valley. ‘It was a very negative year. Three years ago, buyers bought homes to live in, to love them and to raise families and to be there. They weren’t buying it to double their money in six months.’”
Yeah… I’m POSITIVE she was saying this last January.
Does she realize that 2007 and 2008 are going to be ugly?
Got popcorn?
Neil
Sugar, salt or cheddar?
Sorry no more popcorn. The corn has all been used to make ethanol for my Hummer.
2006 the RE market stumbled.
In 2007 the market will fall and reach for the life alert, “I’ve fallen and I can’t get up”.
In 2008 the coroner will arrive…
“Three years ago, buyers bought homes to live in, to love them and to raise families and to be there.”
Now that real estate is kaput, this lady can go back to her previous career of writing vomitous tripe for the inside of greeting cards.
Here’s a fun blurb from the comments section of the Arizona Repugnant story. The comments to these stories are always the best part:
I feel sorry for all the homeowners and investors trying to sell their homes. Phoenix has the strongest economy in the nation, and the homeowners should be selling the homes for at least $700,000.00. It’s not the investor’s fault because the market is collapsing. I say blame the buyers! It’s their fault and they are ruining our economy for not buying the homes. (Jove6116, January 11, 2007 09:07AM)
LOL txchick — the investors were the buyers.
Txchick: We all know you couldnt resist responding to that piece of idiocy. What was your response??
I read this and and imagine the writer of that comment….pig eyes.
Big fat pig eyes with stubby little fingers.
LOL
TX, this is another reason why it is so frustrating to live in this country in this day and age. Is the entire economy just based on buying goods from one another, homes including? Don’t we produce anything of value? Of course, when people don’t buy, then it is their fault times are tough because they won’t buy. What a crock!
“Don’t we produce anything of value?”
Meth seems to be doing pretty well. Oh I forgot, that is being outsourced to Mexico.
What’s frustrating is the level of stupidity rampant among the populace.
Pamela Anderson ? Oups! I forgot. She’s from Vancouver. Maybe her mammary implants are made in the US ? Yes ! The “silly-CON” is US made. Don’t worry it’s about the same in the rest of the western world.
“Phoenix has the strongest economy in the nation”
…uhhhhhhhh
“they are ruining our economy for not buying the homes.”
….uhhhhhhhhh
This person is either one of 2 things: either the dumbest, or the most sarcastic person living. I am afraid to find out which it is.
Oh come on this comment is obviously satire.
Of course. Some people are so dense they ought to require putting smiley face stickers on satire comments so everyone “gets it.”
“Experts blame investors, many of whom fled the Valley, leaving a glut of housing behind. Single-family resale inventory stands at more than 42,000, nearly double that of 2005. ‘They were the driving force,’ said Jay Butler. ‘They were the ones who would pay any price for a home.’”
Of course, this had nothing to do with builders building homes that investors bought, loan officers loaning money on homes investors bought, and real estate agents hawking homes that investors bought. It’s damn-the-investors-time…look what they made us do!
“Experts blame investors, many of whom fled the Valley, leaving a glut of housing behind.”
The experts are idiots.
The investors HAVE NOT FLED THE VALLEY. The investors ARE TRYING TO FLEE THE VALLEY! Who do the “experts” think own the 60,000 (and growing) houses on the market?
Got news, the “investors” are all right there in the Valley, and it’s looking like they are gonna be stuck there or go broke there, BUT THEY HAVEN’T GONE ANYWHERE!
Exactly. Seems these reporters are a little ahead of themselves. Should read “Investors stuck trying to flee valley.”
It’s like they think “investors” are some kind of magic flock of birds that protect home prices while they’re in town.
Yes, as of 3:46 GMT Jan 11, 2007 the responsibility of protecting home prices has been transferred from upside-down St. Joseph to Magic Bird Flock, genus f@kked-upius investisaurus.
The Grand Poobah of omens and skullduggery has ordained it.
5.7 percent of O.C. homesellers lost money last month
http://tinyurl.com/y6wme9
that’s a kinky stat
when it hits 20 or so that’s real trouble
More random OC info.
Another Irvine condo tower readies for residents
Who knows if high-rise condos are O.C.’s next short-lived fad or the next big thing. (Well, they are tall, if nothing else!) Well, the Opus folks are building their Plaza-Irvine complex (displayed at right) down Jamboree in Irvine from the pioneering Marquee Park Place. Move-in starts next month. Plaza-Irvine prices start at $700,000 and run up to the penthouse at $4 million .
Opus reps provided me an update on sales:
• Units sold to date: 190 in Towers 1 and 2.
• Units still available: Tower 1 (4); Tower 2 (8);
• … and 65 in the newest building, 3000 The Plaza.
If you’re not familiar with high-rose condo living, there’s one catch: homeowner association fees. At Plaza-Irvine, fees average $1,000 a month but include, among other things: satellite TV; basic phone service; high-speed Internet; fitness facilities; billiard/recreation room; club room; concierge services; access to pools, spa and steam rooms; some maintenance; and some insurance.
What! No butler, no maid service, no chef, no masseuse, no fitness coach, and no botox treatments! I refuse to buy if those aren’t included!
lol
Jeepers! Another one from Lansner’s blog…
Buyer may need $212,447 salary for an O.C. home
Got $214,447?
That’s the annual salary it would have taken in the third quarter to buy the typical O.C. home priced at $626,000, says the math of the Center for Housing Policy. They kind of regularly do a “paycheck to paycheck” survey to track housing affordability.
By the way, in 2003 (Oops! Mistake made earlier), the salary needed was $134,331 for a $431,000 typical home.
Local renters would have to make $22.33 an hour to afford the $1,161 monthly rent for a one-bedroom O.C. apartment and pay only 30 percent of their income to the landlord. A two-bedroom pad ($1,392) means a raise to $26.77 an hour. (At 40 hours and 52 weeks, that’s $46,446 a year and $55,681, respectively.)
“$214,447…That’s the annual salary it would have taken in the third quarter to buy the typical O.C. home priced at $626,000″
Nah-ah! Just get an option ARM with a teaser rate and stated income, and you’re in like flint. Add that new “no mortgage payments for the first 1-3 years” program, and you’re golden!
Ha-ha to all of the people that thought that buying a house actually required MONEY.
‘The market is clogged by people who are just testing the market to see if they can get top dollar,’ said (broker) Margie O’Campo de Castillo in Phoenix.”
I find this statement hard to fathom. Unless you have been living in a cave for the last year with no newspaper, TV, or way to see the virtual sea of “for sale” signs around you how would you get the idea now is a good time to go fishing for “top dollar” ?
“…how would you get the idea now is a good time to go fishing for “top dollar”?”
Because they wanted to make sure they timed the top just perfectly. You see, to leave even one dollar on the table for the next guy would be unfair. They have to be able to suck every last penny out of the place. After all, they deserve it. Their house is special. It is the best house in the whole wide world. Which is good, because the greedy sons of b!tches will be living in it indefinitely. They failed!
No, no, no….. The people are getting “clogged” by the “Market”, which is testing the “people” to see who will fold first and be wise enough to start taking all that’s left, i.e., “bottom dollar”
For a definition of getting “clogged” please refer to Crispy’s placement of St. Joseph statue in earlier post.
on CNBC they keep talking about ‘private equity’. Shouldn’t it really be called “private credit’ ????
private debtpity!
No. What a pitty !
Great article by Mr. Whitney dubunking any notions that all this was some sort of accident or the result of market forces.
http://www.dissidentvoice.org/Jan07/Whitney09.htm
Yes, according to Mr. Whitney it has always been the Fed’s plan to turn us into serfs.
My question is; why did the Fed wait so long? They could have easily done it, for good, in 1932.
I share everyone’s disdain for Greenspan’s error. However, this “conspiracy”, class warfare, crap is a bit old, tired and treadworn. I’ve been reading this stuff since Lyndon LaRouche in the 70s. If its true, again, the question is; what have they been waiting for? They couldn’t have done it under Nixon? Reagan?
Why, if this were true, didn’t Clinton the “most popular president” in ages, at the peak of his power, not blow the whistle on the Fed? He (if not his wife) are brilliant are they not? They were surrounded by brilliance (Rubin among others).
Why didn’t a man like him, from “humble” beginings, understand the threat of the Fed and address it? You can’t possibly believe Clinton could be controlled by the Fed could you? Duped by them? This doesn’t make sense, does it?
Please. I can take Whitney’s points on the mistakes that have been made but he fades into loony tunes when he tries to tie this all into some grand conspiracy against the “little guy”.
Amen, jag, I think people watch too much TV these days and confuse shows like “24″ with real life. In real-life people aren’t smart enough or unselfish enough to come up with these sinister “master plans”. What I think drives most of our elected and unelected power brokers is self-preservation. If they keep the whole stinking mess going for another two or four years they get re-elected (Reagan, Clinton, Bush) or they get to retire in glory and make six figure speaking fees (Clinton, Rubin, Greenspan).
In the latest of a string of wholesale lenders to make an exit this month, Housing Wire has learned that Southfield, Mich.-based Origen Financial said late Tuesday that its wholesale lending division has been shut down.
The company specializes in manufactured housing loans.
A notice posted Wednesday on Origen Wholesale Lending’s website said that the company will be transferring its wholesale operations to select correspondent partners.
The company boasted 260 employees in various locations across the United States, and has originated over $2 billion of manufactured home loans since 1996. Origen’s most recently available financial reports show that the company originated $62.5 million in loan volume during the first quarter of 2006.
Orgien services approximately $1.3 billion of manufactured home loans from its servicing center in Fort Worth, TX.
At press time, the company had not issued a formal statement regarding the future of the rest of its operations, including its servicing platform.
Nothing new under the sun. But to be fair you must also include the japaneese bastards and the Bank of Japan. Central bankers are bastards and criminals. We knew that a long time ago. Like I said “Nothing new under the sun.”
I am somewhat familiar with Chandler as I had a Beazer home built in 2004 and then sold in 2006 near Cooper and Riggs. I signed up to have the house (5400 sq. ft on 1/2 acre) built by Beazer in Feb. 2004. This was just before things went crazy there and the lines started forming outside the builders to get your name in the hat for the lottery on the houses. At the time of purchase for $440,000, in the back of my mind all I could think is “I hope the housing doesn’t go bust. I was thinking that at that price it had to be at the top.
I purchased the house with 20% down on a 5/1 arm at 4.75%. The ARM made me nervous as well.
I moved into my house Dec. 2004, and in July of 2005, a neighbor put his similiar model house up for sale for $950,000. I told my wife at that point that we are out of here if that house sells. The guy got 910,000 for the house from some californian that did move into the house. I don’t know the terms, but I think that some creative financing was used as the contract price according to the MLS was 930,000, but the recorded price was 910,000.
The house closed in Aug. or Sept. of 2005. I put my house on the market in Oct for 899,000. My backyard was not finished like theirs so the lower price. I almost had it sold to an “investor” friend for 825,000 in Feb. 2006. At the time I had no idea about the “toxic” loans he was using. Finally sold it in June of 2006 for $705,000. I took what I could get after lowering the price to $750,000 by April.
I hadn’t discovered this blog until much later when Ben was featured on CNN. I was looking for a house in Colorado Springs in summer of 2006 and saw the inventory building and thought I should just wait. I had moved to Oregon temporarily, then to Colorado Springs for the fall and now I am back in Oregon renting - thanks to the great advice from the posters on this site.
The house I am renting for $1500 a month is in a neighborhood where 3 houses in a row of the same model just went on the market. 2 of the houses are being sold because of job transfers and the other one I don’t know the reason. The wishing prices right now are 419,000, 400,000 390,000. Sure doesn’t pay to buy and rent out for retirement.
“Prices have been falling in recent months according to the newly renamed Realty Studies center at Arizona State University.”
They should rename it the “REALITY Studies Center at Arizona State University”. Now that will be something useful.