“In The Phoenix Area The Brakes Are On”
A housing report from the Arizona Republic. “Pinal County’s resale housing market is steadily declining. The number of sales dropped to 720 in the final quarter of 2006 from a record high of 1,785 in the second quarter of 2005, according to Realty Studies at Arizona State University.”
“In the fourth quarter of 2006, the median sales price for an existing house was $191,500, down from $220,000 in the fourth quarter of 2005.”
“‘In order to reduce inventories, new-home builders have been aggressively pursuing buyers through incentives such as specially priced upgrades, free pools and gift cards,’ said Jay Butler, Realty Studies director.”
“The number of people from California buying Valley homes has shrunk to 5.5 percent of all sales. In mid-2005, almost 14 percent of all houses sold across metro Phoenix went to someone with a California address, reports data firm Information Market.”
“Many of the California buyers in 2005 were speculators enticed by the Valley’s housing prices, relatively low for the West, and the subsequent wild run-ups they sparked with their demand for houses.”
“If you look at the tax mailing addresses of many buyers in some neighborhoods, half of new homes were sold to Californians in 2005. In the middle of 2005, when Phoenix-area home prices had risen nearly 50 percent in a year, almost 25 percent of all houses were selling to out-of-state buyers.”
“But out-of-state investors are still buying, although at a slower pace. In December 2006, 14 percent of all homes were bought by someone with a tax mailing address outside Arizona. Where are the Valley’s out-of-state buyers coming from now? Texas, Nevada and overseas, real estate analysts say.”
“For the many Valley home buyers and sellers who have contacted me to check to see if their cash-back deal was legal: ‘There’s only one absolutely legal way to get cash back on a home deal,’ said mortgage fraud expert and Michigan real estate agent Ralph Roberts.”
“A buyer’s agent can give a portion of a seller-paid commission back to the buyer. All parties must agree on the transaction. And Roberts said that it has to be clearly disclosed in the sales document, and the lender must agree to it.”
The Arizona Daily Star. “Developers are whittling and revising Downtown’s paper population of high-rise condos in response to a slowing real estate market. Over the past five years, developers have proposed about 1,200 condo units…in and around Downtown.”
“But a real estate market that produced the spectacle of people camping out overnight to snap up 120 Foothills condos in three hours in March 2005 has cooled considerably.”
“The reconsideration of condo projects is happening everywhere. ‘I can tell you that in the Phoenix area the brakes are on,’ said Wayne Kaplan, spokesman for the Arizona Multihousing Association.”
“Condo conversion in the Phoenix area ‘really started in mid to early 2004, peaked in 2005 and ended by middle to early 2006,’ said Pete TeKampe, with Marcus & Millichap. ‘Tucson tracked right along with that,’ he said.”
“Ron Schwabe, general partner in 44 Broadway and a partner in the Depot Plaza project, said he’s convinced the market for high-end condos exists, but he wants to lower his prices. ‘We’re going to carve it back to something you can price affordably,’ he said.”
“At the vacant Santa Rita Hotel, where a sign promises a boutique hotel and condo complex, the size and quality of the project are unchanged, said Lou Schulder, sales manager for Pathway Developments Inc., and he might be worried if he were opening tomorrow.”
“‘It’s hard to live in the present,’ he said. ‘Right now the market has slowed dramatically compared to ‘05.’”
“Now, it hopes to begin demolition of auxiliary buildings by this summer, with completion at least two years off. It will be a different market then, said Schulder, and he’ll have a ‘potpourri of product’ to sell, ‘from basic little 600 square-foot studios to super-sexy penthouse lofts.’”
“‘We’re not going into it with our eyes wide closed. We know it’s much harder to sell condos to people right now. Everybody is a little more cautious right now, but this is going to be a landmark project.’”
“Fewer new homes will be built and sold this year although home prices will continue to climb, according to a Tucson housing analyst. There were 8,579 new-home permits issued in 2006, analyst John Strobeck said. He described 2005, in which more than 11,700 permits were issued, as a ‘dream year.’”
“Speaking before an audience of more than 600, he said 2006 ‘brought us back to reality.’ ‘Instead of hires, there were layoffs. Instead of too much work, there was not enough,’ Strobeck said. ‘So the year brought the entire industry back to the reality of having to run a business.’”
“Permits should decrease this year to 8,200, he said. But that figure ‘could be a little optimistic.’”
Checking at this link it isn’t just Pinal that turned in a decline. The last table at the bottom.
‘The Arizona Business Conditions Index fell 2.6 percent in January, to 53.4 from 54.9 the previous month. An index reading above 50 generally indicates a growing economy. The L. William Seidman Research Institute at Arizona State University said business activity as measured by the index has been slowly falling in recent months from ‘the frenetic pace it held while the real estate market was booming.’
The current “market” prices in Phoenix are all based on fraud. Mortgage fraud and cash back. I expect the big story in 2007 for the Phoenix area would be the prison sentences of every facet of the real estate market.
IMHO is the appraisal is raised so the RE agent can give cash back from his commission , than that might be a exception to realtors being able to give a cash back to a buyer . The key to this commission kickback is it has to be approved by the lender . If the appraisal is inflated and the realtor charges a 20% commission and gives 15% of that commission back to the buyer ,than it goes beyond what would be considered normal and it’s a pay-off rather than a realtor giving a incentive from their commission to make the deal .
The biggest problem IMO is that comp prices can no longer be trusted in the Phoenix area market How can anyone buy based on the fact that 15-20% has been schemed off the top with mortgage fraud and cash back deals? That means that the actual market prices of homes in the Phoenix area is 15-20% lower right now and it could be even much lower a year from now. I expect lawsuits and prison sentences to start making headlines soon down in that crooked Phoenix market.
“‘We’re not going into it with our eyes wide closed. We know it’s much harder to sell condos to people right now. Everybody is a little more cautious right now, but this is going to be a landmark project.’”
Good Grief, this fellow is an idiot ‘eyes wide closed’… ‘landmark project’. Right!
Translation: This place is special. This place is different.
Nice headlines to kick off the crucial “Spring Selling Season.” Should give what buyers are out there great confidence!
I’m off to scope out a few foreclosures.
Our newspaper ran three stories on foreclosures today. One local and two national stories.
That should make people think twice before buying into the “spring rally”.
According to MR Bush and his cronies the economy is doing great.Earnings are strong, inflation is low and XOM just made, I believe, 38 billion last year, party on wayne! Do not let the evil media brainwash you into thinking there is a housing bubble, please.It is a great time to buy as prices are down maybe 10% after at least 100% increases in the past 3 years.David lereah says all is well and 2007 will be just rosy.Oh, don’t worry about the massive increase in forclosures, tightening credit, fire sales and historically high inventories.Spring is right around the corner and you better buy now before someone else gets your dream home.
larry goldilocks kuntlow agrees and says this is story never told. everything is great. profits up, jobs up, stocks up, consumer confidence up and median home price up compared with years between 1776-1996 on average.
I thought he had stopped doing lines of cocaine? I guess not!
That is correct, our economy is strong based on ’sound’ business practices, along with strick guidence from the FED. The American people have never had is so good!
Now go out and get that Chinese 65″ flat screen T.V. the SuperBowl is getting ready to start. You can pay for it next year!…. :- )
Yep… buyers won’t notice all of the inventory… nope.
It amazes me what some homes try to sell at. Yet… you can walk down the street and often find three homes on a block for sale.
You are more ambitious than I, txchick57. I’m simply spectating for the next 18 months.
Then again, even foreclosures in California are crazily overpriced. Cest la vie.
Got popcorn?
Neil
Your 18 months of being on the outside looking in, seems just about right. I’m looking towards Nov-Dec 2008, the worst months for real estate activity. I keep replaying one of my favorite stock market sayings… “When in Doubt, Stay Out.
The worst months for RE ARE EVERY MONTH, when the property is held as an REO on some frantic lender’s books. The real opportunities will be when the lenders touch their reserve numbers… (provided regulators don’t ease the numbers again).
And!!! … You won’t have to know which room was Billy’s, what brand of peanuts the squirrels like best, write one of those mushy “pick me” letters, or meet the HOA first. Back to basics - STRICTLY BUSINESS, FINALLY!
hey !we have 24 hours till the spring season starts-
I’d love to see the monday inventory # bet it’s the biggest gain ever
so when can you say amarket has crashed ?
Interesting about the out-of-state buyers of RE in Phoenix. I work near the Camelback corridor and see houses that are obviously vacant with a For Sale sign planted in the front yard in many neighborhoods. Suppose I can buy a $200,000 condo (guarded, gated, and with 2 car garage) for $280,000 and have a 2006 model Porsche 911 thrown in?
Hey everyone the great real estate bonanza of 2007 is going to start right after the superbowl.According to the REIC it’s a great time to buy.Trust me, they are looking out for your best interests.I think i’m going to go cruise some open houses before the superbowl starts so I can see the excitement in the realtors eyes.Maybe I can get some free cookies and maybe some pizza
Hee Hee!
I posted a few weeks ago about a young engineer at work looking for a house to buy in Phoenix. He’s still looking. I’m all for looking and going to open houses, but only to eat free pizza and get some cookies. Ha! I get onto zip realty every now and then for checking the reduced prices and one RE agent there in the phoenix area tracks me down and calls every once in a while, sends me e-mail. I don’t mind it but NO, I AM NOT BUYING FOR QUITE A WHILE!
Only if it’s a Turbo.
What would have been a “normal” sales number before the bubble ?
There was nobody there before the bubble.
Here in North Sacramento(Citrus Heights & area) I’ve noticed a trend of realtors co-listing on residences. Usually 2 women. Obligitory 5 sandwich signs, balloons, tiles on the main sign down to the ground, and actual prices on the info sheet.
You can just see the desperation.
They realize a smaller/shared piece of the pie is better than none at all.
. . . and going back to work @ Linens N Things. ( Shudder )
Yes, that pisses me off when there is no price on the price sheet. I just throw it away and move on.I also hate it when the realtors are too lazy to put a price sheet on the sign.I hear walmart is hireing people with sales experience.
The references to Californians buying out of state property intrigues me. I know property in California in SF, SD and LA has gone postal in the last 6 years so I assume that these “Californians” buying out of state have sucked money out of their property ATM’s to invest in these out of state properties. Incomes in the major cities are higher. We all know that but not everyone in California makes $150,000 a year +. In fact, very much the opposite. The majority make $20 per. hour or less. I can only think that these Californians (I live in Ventura Country, Ca.) who have money to invest in out of state properties, have the same financial mentality as one of my neigbors who, finding herself in financial trouble but wanting to maintain her life-style, sucked a big chunk of money out of her house (she’s 35 and divorced with two kids) to continue paying for her Toyota Land Cruiser which, she says, “I cannot live without my SUV”.
The bigger picture is this: This lady and her ex-husband (a cop) bought their house in 1995. Probably for around $250,000 give or take a few grand. It’s now valued at $700,000 but one thing is VERY obvious. If she and her ex-husband were looking to buy that house today - they could forget it. Maybe with an exotic mortgage but with a, “I cannot live without my SUV,” mentality, I can look in my crystal ball and see very clearly the future. Foreclosure. Makes you wonder how many Californians have the, “I cannot live without my SUV, ” mentality.
‘If you look at the tax mailing addresses of many buyers in some neighborhoods, half of new homes were sold to Californians in 2005. In the middle of 2005, when Phoenix-area home prices had risen nearly 50 percent in a year, almost 25 percent of all houses were selling to out-of-state buyers.’
Sounds like many of these Californians bought right around the peak. Nice!
I received the weekly NOD for my area and notice an occasional FB from Az and Tx. I think they drank some of our kool-aid…
Yes, it peaked at the peak. When Clowniforinians realized they couldn’t magically sell their house for the amount god promised, they knew the banks still honored god’s promises and took out HELLOCs and other loans to buy in Ariz and elsewhere to double down on god’s promises. God promises to pay you to live in California (if you ‘own’ a home). He loves you that much.
“Sounds like many of these Californians bought right around the peak. Nice”
It was the out-of-staters that MADE the peak.
Then that helped feed the “everybody wants to live in Phoenix” mantra, which I had never heard of prior to 2003 in my life!
In my partying 20’s, we called Phoenix “rehab” because all the people who partied too hard suddenly moved there to “recoup”.
Suddenly, I start hearing about all these people wanting to move to Phoenix and Las Vegas… it was highly interesting. (and Bakersfield and Palm Desert and St. George Utah and Coeur D’alene Idaho etc)
It shows how technology really changes things. (specifically in this case, Air Conditioning)
I work in Chandler AZ near Phoenix and a few people I work with want to buy homes now. Oh well……….
good. send them to my neighborhood. we have plenty to unload. for 2.5 years we been waiting for that “family neighborhood feeling”. it’s disheartening to live in a neighborhood with out neighbors. and those that are here are angry, over leveraged blame it on all those ca freaks who made me buy my over priced track house and now won’t get in a bidding war, how dare you make me list my house for 9 months attitude…it sucks. 19 houses for sale in my neighborhood. sorry for the vent but it doesn’t bode well for a sense of community for those of us just living our lives. its just another part of the overall big picture. I’m afraid to see what it’s going to be like in a year or 2.
I’m not sure if “neighborliness” will ever come back in style anywhere for a few decades. Outsourcing and peak oil will cause a lot of us to become a more transient society, opting for renting where we work and being away from our residences for weeks or months at a time. That will be a burglar’s delight. I’ve been on the road for more than the last 6 years and renting since 1996. I predict severe economic times ahead, so I have to make as much money as I can to prepare to downsize my income later, as I think I will be forced to - through world competition.
Add to that - we are no longer a mono-culture. My own culture is probably very different from yours and would give you a queasy feeling. I’m an atheist and like heavy metal. Would you like me for a neighbor? I doubt it. When my family lived in California in the early 1960s we would have neighborhood parties all the time - everyone shared the same values - went to church together, went to the lake together, and so on. This is the new America - transient, and full of strange cultures.
You sound just like me! I am a science teacher who when in college took way too many science classes to ever believe in a god.
WAman, I’m not sure if you are aware of this, but in the 1990 US census, 8.4% of Americans did not believe in God. In 2001 that almost doubled to 15% ( http://en.wikipedia.org/wiki/Religion_in_the_United_States ). I anticipate in 2010 it will be about 20% of Americans who are Godless. The number of conservative atheists is also growing and spells doom to Republican Party mainstream as we know it. We will become more like Europe in a couple of decades when religion will be unimportant in our lives.
Bill,
not sure why, but your post about un-neighborliness saddened me and struck a chord with me.
I’m not sure that people need the same “culture” to have neighborliness. Just respect.
In my experience, whenever I’ve lived in a relatively mono-culturalistic place (i.e. the suburbs) I’ve found there to be little to no neighborliness.
and the reason from what I could fathom: people have big homes and big yards, and they drive into their attached garages and thus never see each other. Plus they commute a lot so aren’t home much.
Which is why I love living in the city (not a paradise, I know). But in the city (at least where I am) the houses are relatively close (probably 20 feet between homes) and we all have back yards and keep our fences LOW (5ft) and we have detached garages. So you SEE your neighbors all the time.
And we all get together for holidays outside in the street (we block it off).
Yet our cultures are very different.
the 3 houses on each side of us:
3: Elderly retired couple. He was bartender. Very poor
2: Lesbian couple (teachers) with 3 adopted African American daughters
1: very “organic” family with delayed adult children. They literally grow crops in their back yard (corn, sunflowers, etc) in an urban experiment. dad’s a welder, mom’s a telephone operator.
0: us. we’re DINKs (doctor/high level IT infrastructure person)
1: Landscaper family with 2 kids that go to catholic school.
2: very catholic mixed Peruvian/American family orig from CA with 3 young kids. fairly affluent. (he’s a director for films and commercials)
3: Pothead modern artist and his female partner.
Yet we all get along really well. In fact, all the kids of all the above play together every day. I often watch the kids (especially the landscaper and peruvian children)
we get together with the landscapers and the peruvians once/week in the summer, and maybe 1 per 6 weeks during winter (we travel a lot and the kids in school). The lesbians and the catholics get together a lot because their kids are in the same catholic school.
we have 4 neighborhood events where everybody gets together:
1. neighborhood night out, 2. halloween, 3. winter party, 4. end school party
and so on.
You just have to find the RIGHT neighborhood!
But I’ve found that these neighborhoods are hard to come by in the “new suburban” lifestyle plan, because the homes are set up as “mini castles” complete with metaphysical moat… it’s isolating in my opinion.
people knock the “liberals” and “pc” all the time, and often they have a point. But to me I love my very liberal neighborhood because it’s liberal in the true sense: people accepting each other’s differences and still respecting one another. So the catholics break fast with the lesbians. And my organic neighbors give me all the butternut squash that grows on my side of the fence. And we help to watch the Lesbian’s kids, the catholics kids, as well as buying lemonade and buying fundraising stuff from the single-parent kids across the street, and the single gay father’s kid kiddie corner to us and so on.
Clouseau, what about my prediction that society is becoming more transient? Yes, you may as well live in an apartment complex these days because in SFH neighborhoods all over the place, few people want to know each other. I don’t like it, myself. I would prefer to have neighbors who are like me. But I’m very transient. This is the new world economy. I prefer 5 more years of this lifestyle than becoming a wage slave at a big box store for 25 years. At some point I would like to stick to one area and get to know my neighbors, be involved in neighborhood watch, and so forth. It will take me a lot of money to get to that point because I intend to become independently middle class (not requiring a job, but living on my investment income to afford a middle class lifestyle). I currently live in a mixed neighborhood. Most people here have something in common - they own a dog, and that is the best way to meet neighbors. This is an apartment complex that is pet-friendly. I have a cat and she’s enough for me - she earns her keep by scaring away scorpions.
IMO, there isn’t a lot that can be done for those people. One of the few couples I talked to about it decided not to buy last year in Phoenix as they tried to sell in Cottonwood. Now they live in an apartment in Phoenix and have seen deal after deal fall through on their home. But still they say stuff like, ‘it’s all right, there are so many good deals in Phoenix now.’ This as they pay for two households.
Everybody is close to each other on my block . On a daily basis I have neighbors knocking on my door ,and everybody looks out for each other . We don’t have any vacant houses because of speculators ,so I’m happy about that .
Actually, my friend in Glendale has great neighbors. I know some of them because I’ve been to several parties of my friends’. I think these are exceptions, rather than rules.
Sure Mr & Mrs Realtwhore, RIGHT after the Packers beat the Bears today..I’ll run out and buy 3 of your DreamHorror houses before I’m Locked Out Forever.
Now THAT would be a trick (since the Packers aren’t even playing today!)
Go Colts. I mean Bears.
Sigh, who cares, as long as the game can finish, and we can all run out and buy a house!
“The number of people from California buying Valley homes has shrunk to 5.5 percent of all sales. In mid-2005, almost 14 percent of all houses sold across metro Phoenix went to someone with a California address, reports data firm Information Market. Many of the California buyers in 2005 were speculators enticed by the Valley’s housing prices, relatively low for the West, and the subsequent wild run-ups they sparked with their demand for houses.”
California equity locusts propped up the PHX prices and spurred a building boom. Too bad that speculative demand is transient demand which morphs into speculative supply on the downside of a parabolic bubble price blowout. Anyone who wants to buy a home in PHX as a place to live in for the long term would be well-advised to wait for the prices to settle back down to levels that reflect end-user demand before making a purchase. Rather than catching a falling knife, first give the California equity locusts the chance to enjoy their bitter harvest of bad karma.
“Anyone who wants to buy a home in PHX as a place to live in for the long term would be well-advised to wait for the prices to settle back down to levels that reflect end-user demand before making a purchase”
And to think I know someone who just pulled out a lump sum of Heloc money to buy three of them. I guess I should haver tried harder to talk them out of it.
Yep…I’m also friends with someone who did a 2nd on his condo in San Diego (the one that he lives in) to speculate on a condo in Phoenix. I tried to talk him out of it but he had the “get rich easy” look in his eye. He is an educated person and agreed with everything I told him about why NOT to speculate in Phoenix due to the timing, yet he did it anyway. Well the last I heard he couln’t unload the condo (he way overpaid) and was thinking about renting it (even though he signed on the contract that he wouldn’t. The broker told him, that even thought it was stipulated in the contract, no one would know if he didn’t put a sign in the window!). Despite this, last I heard is he was looking for “investment” property in Montana!!!
Maricopa County notices of trustee’s sales jumped to 1623 in January, the second-highest monthly figure in the last 145 months.
No question that the Arizona market had a high % of speculators ,(especially in 2005). It was geting to expensive for speculators to invest in California so they moved on over to Arizona/Florida ,than it switched to Texas and Idaho in late 2005- mid 2006.
Its really has been a traveling speculative bubble were the market makers (who hold seminars alot and have realtionships with builders ) pull the locust in . After the locust invades a area ,good luck to the locals for being able to find affordable housing .
Right now there is alot of locust bagholders that can’t sell ,but that doesn’t stop them ,they just buy another place in the new in-crowd location for speculation (currently alot of places in texas ).Don’t worry ,another “best place to invest” will come up and the locust will run up the prices in some far-fetched town somewhere .
When the dumb lending stops the locust will die a painful death .
“Rather than catching a falling knife, first give the California equity locusts the chance to enjoy their bitter harvest of bad karma”.
since today is sunday, this will be my gospel for the day. the locusts have ravaged north county for years. be gone and bring back the 300’s.
“In Phoenix the brakes are on”
Yeah, after the car went over a cliff…
In Redding today, saw a commercial for a 3bdr 3.5ba house.
$999,000
IN REDDING!!!!