July 4, 2007

Home Prices Are Coming Down In Arizona

A report from the Arizona Republic. “Pat Thomas is a longtime West Valley Realtor. Question: What is your advice to current renters thinking about purchasing a property? Answer: ‘It’s a great time to buy because home prices are coming down and there are a lot of homes to choose from.’”

“Q: What is your best advice for potential clients looking to sell their properties right now? A: ‘Since there is a record number of about 53,000 homes listed for sale on the Arizona MLS, and since only 10 percent of these properties are currently selling, my advice would be that if they do not have to sell their home right now, don’t put it on the market.’”

“‘But if they do have to sell, their house must be in ‘parade-ready’ condition. And it must be the most attractively priced property among comparable homes in the area. Plus, they need a Realtor who will pull out the stops when it comes to marketing their home…Otherwise, the chances of the home selling in this market are remote.’”

“Q: What housing/real estate trends do you foresee in 2007 for the West Valley? A: ‘No one has a crystal ball…There’s about a $40,000 gap Valleywide between the price of homes being listed and what they end up actually selling for. I believe this gap is going to have to narrow before sales pick up, which means that home prices will have to come down even more than they already have.’”

“In metro Phoenix, there are 52,000-plus listings. And that figure doesn’t include the 10,000 to 20,000 spec homes sitting built and unsold. So the listing figure is lower than the actual supply of homes in the Valley.”

“Valley home prices are down about 5 percent from a year ago. But some home builders are offering incentives of as much as $100,000 to sell spec homes.”

“Sergio Arellanes and other undocumented immigrants spent the day contemplating their fate in Arizona after the governor signed a bill that could put companies out of businesses for hiring them.”

“‘A lot of people are planning to leave,’ said Elias Bermudez, president of the group Immigrants Without Borders. ‘A lot of businesses are in danger of shutting down.’”

“Many long-time illegal residents own their own homes. If they decide to sell and move on, their houses will add to the record 52,000 existing homes for sale Valley-wide.”

“Based on a normal monthly resale pace of about 5,000, metro Phoenix now has 12-month supply of homes for sale. A healthy housing market has a four- to six-month supply.”

“If even 1 percent of Arizona’s undocumented workers owned homes and then tried to sell them, it would add at least another month to the housing market’s oversupply of homes for sale and extend the slowdown by at least that much.”

“Northeast Phoenix has some of the most expensive homes in town, with some regularly selling for more than $1 million.”

“85028, from Dreamy Draw north to Cactus, and from Cave Creek west to Tatum. The number of sales in the area during the month of April - 40 - was equal to the previous year, and the median price was down to $333,000, compared with $377,000 a year ago.”

“85254, from Shea north to Union Hills on the eastern side of Tatum. The number of sales during April was up, to 147 from 136, and the median price was down, to $420,000 from $455,000.”

The Arizona Daily Star. “A program to step up enforcement on dangerous, dilapidated housing in unincorporated areas has been shut down indefinitely because there’s not enough money to pay for it. Two years ago, the Pima County Board of Supervisors unanimously ordered the creation of a Distressed Properties Task Force that was supposed to develop an enforcement program and recommend changes to county law.”

“The program never really got off the ground, apparently a victim of the slowdown in the housing market. Stepped-up enforcement was supposed to be paid for with building-permit fees, which have fallen off precipitously.”




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64 Comments »

Comment by aladinsane
2007-07-04 12:24:04

“‘But if they do have to sell, their house must be in ‘parade-ready’ condition.

The next stage in staging?

Marching bands that circle the neighborhood, making things even more ‘parade-ready’?

Comment by oscar de low renta
2007-07-04 14:30:44

Yeah, that’d be a lot of fun… in 110-degree heat.

 
Comment by Patricio
2007-07-04 18:18:05

I will give him the parade wave as I leave the house.

Comment by AndyInJersey
2007-07-05 07:38:22

That’s the same as the Miss America wave, right. Hand aloft, slightly cupped, side to side twisting motion? Optional (but highly recommended) gentle tilting of head about every 5 seconds as you turn to another group of admirers. LOL

 
 
 
Comment by einzige
Comment by Jingle
2007-07-04 15:43:17

Wow, that foreclosure graph is going straight up. In the words of the big guy, “Too the moon, Alice”. I see the velocity has more than doubled the 1993 foreclosure rate. In California, we did not have peak foreclosures until 1995. Did AZ not get hit that hard in the 1990 housing downturn?

Today, in Sacramento, I was looking at some foreclosure properties. Two years ago, in 2005, you could barely find a house for under $400,000. Today, there are hundreds and hundreds of bank owned foreclosures priced around $200,000-$300,000. Here is the fascinating part: Hovnanian and Hortan are all pricing below the bank foreclosures! So you can buy a trashed foreclosure house needing carpeting, a roof, paint and new landscaping, or you can go see a few select builders who will make you a deal on a brand new 1800 SF house for $285,000 and throw in all the closing costs and some landscaping for free. The battle cry will be sounded in the fall as the banks will get tired of carrying these houses for 6 months. It will be very interesting to see where prices are going. The 1800 SF house should rent for $1400/mon, making the historic sale price $170,000 or so (10 times the annual rent). And that is about where they were in 1998 (though they rented for $1200/mon back then).

 
 
Comment by aladinsane
2007-07-04 12:26:59

“A program to step up enforcement on dangerous, dilapidated housing in unincorporated areas has been shut down indefinitely because there’s not enough money to pay for it.

Hello Crack Houses!

Comment by targetdrone
2007-07-04 14:12:52

There is enough money to pay for it. Its just not being allocated to enforcement.

 
Comment by AndyInJersey
2007-07-05 07:40:06

With all the crackhouses the price of crack shoudl crater. Woohoo! Free crack for all!

 
 
Comment by tj
2007-07-04 12:41:15

i gotta ask..

what’s the biggest difference between this housing down turn and any since 1929?

my guess would be that there hasn’t been such a huge percentage (or actual number) of people underwater that can’t sell or hold on to their homes. that’s the biggest. god it seems like i should be saying a lot more in that paragraph…….

next comes the subprime meltdown packing an economic knockout punch.

together they have to have sewn the start of a financial firestorm the likes of which we’ve never seen..

Comment by dennis
2007-07-04 13:00:28

In looking at the potential dangers of a melt down such as 1929 we have to look at the availability of M3 which is no longer published along with regulation by the banks and lenders as to wheather enough potential buyers qualify under present guidelines. Since mortgages are going to be harder to get I see prices of existing homes dropping like a hot rock in a elevator shaft! A vaccume like this will be considered deflation in the housing sector and could very well spill over into other equities such as the Stock Market. This risk is very real and the stock market has been behaving very erratically as of late. Up a 100 points one day and down a 100 the next. What is to come?

Lets let Neil purchase some popcorn for all of us and we will join the party.

Comment by lost in utah
2007-07-04 15:26:50

Any physicists out there? Just curious - does a hot rock fall faster down an elevator shaft than a cold rock? LOL

Reminds me of the DVD “Front Range Freaks” - about climbers, one scene climbing a BIG elevator shaft. Sorry, OT.

Comment by joeyinCalif
2007-07-04 17:36:45

physics hobbiest..

A hot rock contains extra energy, and energy=mass (e=mc2), therefore the hot rock is more massive..

but different masses of objects do not affect their acceleration in a gravity field (Galileo’s leaning tower of Pisa experiment) so, no.. both should fall at the same rate.

However, there is the little matter of an atmosphere in the shaft; it’s not a vacuum. So thermo/fluid dynamic effects could chnge the way air..

OK.. i’m lost.. any rocket scientists out there?

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Comment by SteelCurtain
2007-07-04 19:38:55

Also, don’t forget the hot rock will heat the air around it as it falls and hot air has a lower viscosity so the drag will be less and it will fall faster :-)

 
 
Comment by BubbleWatcher
2007-07-04 22:09:51

About the same. The actual differences between hot and cold will be smaller than the things that our model does not account for, such as differences in pressure and temperature at the top and at the bottom, possible jet streams or even people interfering with our rock as it falls.

It’s like figuring out whether the return on CDO will be 7.21% or 7.24% when the holder should be preparing to 99% loss of principal… :)

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Comment by Neil
2007-07-04 16:44:08

I’ll bring the popcorn…

And some wine. :)

There is definitely deflation ahead. But we’ll have a bit of inflation first… so I think that the mix will balance out.

I’m not exactly seeing a shortage of unskilled labor in 2008…
Or a shortage of wood…
granite suitable for countertops…
And Travertine… How the heck did it get so cheap so fast?!? Available by the crate pallet at a local home depot! Today.

Its spilling over.

Got popcorn?
Neil

Comment by mikey
2007-07-04 17:11:47

If these FB’s thought it was hard squeezing blood from a turnip, wait until they try squeezing more money out of these overpriced refi’d POS in the next few years :)

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Comment by tj & the bear
2007-07-04 16:19:33

what’s the biggest difference between this housing down turn and any since 1929?

Shall we make a list? In no particular order…

1) National in scope.
2) Occurring during so-called “Goldilocks” economy.
3) Historic gains in prices (upwards of 45% annually in some markets).
4) Rampant fraud.
5) Complete lack of lending standards.
6) Historic gains in homeownership (from 64% to nearly 70%).
7) Outsized growth in subprime.
8) Outsized growth in younger & single female demographics.
9) Dominance of exotic/toxic mortgages (SI, IO, OA, NA, ZD, 10x DTI, NINA, etc.)
10) Non-GSE securitization (MBS, CDOs, etc.)
11) Historic level of overbuilding.
12) Historic level of building malinvestment (McMansions, luxury tower condos, condo conversions, exurban development, etc.)
13) Huge MEW borrowing (HELOC & cash-out REFI)
14) Extremely favorable tax treatment.
15) Historic level of second home & speculative purchases.

I could go on and on. We are SOOOOOO screwed.

 
 
Comment by Mr Vincent
2007-07-04 12:57:42

“Question: What is your advice to current renters thinking about purchasing a property? Answer: ‘It’s a great time to buy because home prices are coming down and there are a lot of homes to choose from.’”

It’s ALWAYS a great time to buy isn’t it?

Why does the media insist on asking those who depend on real estate transactions, a question which will always give the same answer?

It’s time to throw out the so-called experts and increase the interviews with bloggers.

Comment by snabs
2007-07-04 15:34:51

I’ve asked myself that same question. I think they just don’t know any better. Reporting standards and skills have declined. I think they can’t even spell conflict of interest anymore.

 
Comment by Jim
2007-07-05 08:04:13

“Why does the media insist on asking those who depend on real estate transactions, a question which will always give the same answer?”

Here in Columbus, Channel 10 News used to have a “personal finance segment”. The segment was sponsored by Huntington Bank. One of the higher-up bank officials told me that the script for the segment (which offered advice on investments, loans, housing, etc.) was written lock-stock-and-barrel by Huntington Bank. (For the record, he thought it was disgusting and a complete conflict of interest.) Yucchh. If you’re getting your news from The News, you’re screwed — you’re probably unknowingly buying into somebody’s corporate agenda. (Or, as George Carlin used to call them: “business criminals”. They’re criminals who just so happen to be in business.)

 
Comment by Darrell_in_PHX
2007-07-05 08:21:13

How are they going to get advertising dollars by telling the truth?!?!?!

Always remember the job of the reporter. Report the news? No silly! The purpose of the reporter is to generate ad revenue.

NEVER forget that.

 
 
Comment by Brad
2007-07-04 13:00:29

There’s 53,000 houses for sale on the Phoenix MLS, but 61,000 on ziprealty for Phoenix. And both are understated.

http://tinyurl.com/2egebh

Comment by ShaunT79
2007-07-04 13:32:04

Ziprealty number includes land for sale. You can filter it out and you will get closer to 53000. Agree that it’s understated.

 
Comment by SoBay
2007-07-04 15:21:55

Totally agree. They are also not capturing FSBO.

 
 
Comment by Misstrial
2007-07-04 13:01:02

““If even 1 percent of Arizona’s undocumented workers owned homes and then tried to sell them, it would add at least another month to the housing market’s oversupply of homes for sale and extend the slowdown by at least that much.”

Hmmm….I wonder what sort of “documentation” they used to obtain home loans.

~Misstrial - who wishes everyone a happy 4th of July :)

Comment by Neil
2007-07-04 16:47:02

Happy 4th everyone.

I liked this part:
“‘A lot of people are planning to leave,’ said Elias Bermudez, president of the group Immigrants Without Borders. ‘A lot of businesses are in danger of shutting down.’”

“Many long-time illegal residents own their own homes. If they decide to sell and move on, their houses will add to the record 52,000 existing homes for sale Valley-wide.”

They’re going to be unemployed. What is Phoenix’s construction employment? IIRC, its 40% of total employment. Yea… Great time to buy… NOT!

Phoenix is toast. ;)

Got popcorn?
Neil

 
 
Comment by lost in utah
2007-07-04 13:17:45

PHX could end up like LA in 1887, which had a pop. of 100k - two years later, it was 50k. LA had a land-boom Ponzi scheme that boggled the imagination - land that had sold for $1/acre in 1882 sold for $1000/acre in 1888. All of a sudden, the banks froze their lending and the entire thing collapsed within one month. By the end of 1888, the assessed valuation of LA County dropped from $63 million to $20 million. For the next two years, the county lost people at a rate of 3,000 a month.

 
Comment by Casa$Loco
2007-07-04 13:19:32

I warned some friends and relatives in the summer of ‘05 not to buy into this market. No one listened to me. They bought at the very top of the market and are now holding multiple depreciating properties in the Phoenix Metro area. They are f*cked. I never understood how they thought prices could continue to go up 20% a year forever. There are 2800 houses for sale in Queen Creek AZ, a town with a population of 16,414. That’s just crazy. I’ve heard there are entire BLOCKS with empty homes for sale.

Comment by Desertfox
2007-07-04 15:44:38

I moved a friend of the wife’s who was renting from Queen Creek to Tucson on Memorial Day weekend. The place is downright spooky. This place was 40 miles from I-10. The roads are still rural two lane with 4-way stop signs. It would not work in NJ, but works here. Even on non work day traffic was backed up. One hellish commute. Got to be well over an hour, probably closer to two, each way to Phoenix. The development she was at was circa 2000. It was still 7 miles to fine dining at Subway or Panda Express and a gas station. We came back through Florence. Going in this direction narrow roads with corn and cottonon either side. Periodically, the road would widen with new pavement for about a mile with a subdivision or two or either side complete with human directional hawking you into paradise. Housing was not cheap,I only saw one with a sign “from the low $300’s and someof the houses were none too big. this was at the low $300’s development. Many had names more suited to Virginia Beach, “____-Crossing”, “______ Landing”,complete with little waterfalls at the entrance. Then there would be some Tony Soprano type crib’s on an acre+. It was truly surreal. Kinda reminded me of the old Charlie Chan flick Castle In The Desert.

Comment by Paul in Jax
2007-07-04 16:50:34

Housing was not cheap,I only saw one with a sign “from the low $300’s and someof the houses were none too big. this was at the low $300’s development.

Let’s not mince words: these houses are not just not cheap, they are outrageously expensive. Think what that will buy in all but about 10 states in the country - a beautiful home in north Atlanta, a mansion in Rochester, even a stately suburban home in Jacksonville. I mean, I kind of like Tucson, but these exurbs of Phoenix just boggle my mind.

Comment by Bye FL
2007-07-05 07:20:52

I predict those $350k houses will be $100-150k in a few years. Who wants to live in this rural area 1-2 hours commute from work? I can get a house in the rural midwest *today* for under $100k on several acres of land. In fact there are places in north FL cheaper with less commute.

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Comment by zeropointzero
2007-07-04 16:14:56

I know they’re screwed. You know they’re screwed. The question is: do they know they’re screwed yet?

Have you gotten the grudging “maybe you were right” from any of them? Or is the denial still holding strong?

Comment by Mike a.k.a/Sage
2007-07-04 20:52:45

All I get is, “prices will go back up”, but never a clue when. How can so many people be so ignorant of history?

Comment by Bye FL
2007-07-05 07:25:08

Prices will go back up about 10 years from now at about 4% a year. If they want to wait that long, more power to them. I bet most will just walk away as their houses lose another 25% value and their ARM goes up another two notches, they will give up

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Comment by SteveAz
2007-07-05 11:59:23

Denial is VERY strong. Most of the “investors” I talk to are already pointing to a recent “study” that indicates 2008 is going to push prices back up 8%. Why? No answer….they just say it is so.

 
 
Comment by AndyInJersey
2007-07-05 07:49:23

If you figure an average houshold of 3 people per household, thats’ like 50% of the properties are for sale.

 
Comment by AndyInJersey
Comment by AndyInJersey
2007-07-05 07:55:27

As you read, just replace gold and mining with house flip and mortgage lending opportunities. LOL

 
Comment by bradthemod
2007-07-05 10:42:08

LOL. At least 50% of businesses that once operated in Bodie were saloons.

 
 
 
Comment by ShaunT79
2007-07-04 13:33:25

The illegal immigration bill could really have a big effect on AZ. Maybe this will be the scapegoat? Who knows. It’s definitely a good thing long term. Remind me to call to support the legislators.

Comment by tx_john
2007-07-04 15:37:40

Now, do these illegals have the money to buy the homes from these under water sellers? Nope.

No scapegoats this time. People did not want illegal immigration during the boom and they will not want it during the bust.

Comment by Misstrial
2007-07-04 16:49:30

Arizonans:

Why the disconnect - citizens do not want illegals but McCain & Kyl do?

~Misstrial

Comment by Darrell_in_PHX
2007-07-05 08:28:39

The citizens are worried about thier saleries, their childrens’ schools, the wait at the emergency room, and the decline in their neighborhoods as empoverished conditions move further and further up the I17 corridor and spreads out from there.

The senators are worried about corporate campaign contributions, and corporations are concerned about holding down wages and selling goods. They want the guest worker program to hold down wages at the low end, and tieing imigration to education and skills to hold down wages at the high end. They are willing to give the liberals the amnesty they want, in exchange for imigration policies that hold down wages.

A true sign of the erosion of the power of organized labor is the lack of concern for labor shown by the democrats in the imigration debate.

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Comment by Misstrial
2007-07-05 15:08:39

Ahhh, thank you for that answer. Between the recent Senate immigration bill, the bill on Napolitano’s desk re employer sanctions, Sheriff Joe, McCain & Kyl and the Arizona legislature, I was confused as to what was going on.

~Misstrial

 
 
 
 
 
Comment by oscar de low renta
2007-07-04 14:28:04

Longtime AZ realtor Pat Thomas is naturally saying Now’s a super-duper time to buy. It always is, any realtor will tell us.

What’s interesting though is Pat’s comment: “I believe .. that home prices will have to come down even more than they already have.” Seriously, it is very rare we hear realtors saying this kind of thing. I mean, that’s an open acknowledgment that now’s NOT the best time to buy.

Comment by Rich
2007-07-04 15:33:54

What’s interesting though is Pat’s comment: “I believe .. that home prices will have to come down even more than they already have.” Seriously, it is very rare we hear realtors saying this kind of thing. I mean, that’s an open acknowledgment that now’s NOT the best time to buy.

The NAR has froze the assets and stripped their membership.

 
 
Comment by Aqius
2007-07-04 14:33:25

So let me get this straight: In the community of Queens Creek, the number of unsold houses is larger than the entire population!?

Wowwww !!!

Comment by Jingle
2007-07-04 15:48:58

Aquis, I think you are a little bent in your perception. Houses for sale, 2800. Poplulation, 16414. That is O.K., cause the market is a bit bent also.

 
 
Comment by Aqius
2007-07-04 14:38:19

Oh sorry after re-reading the number is 2 thousand - not 28 thousand.
My mistake - … I mean, I didnt know the terms …. the poster switched em at the last minute … and it was appraised too high … yadda yadda

( yeah - ’bout time for a break from these blogs now - !! )

 
Comment by AZ_BubblePopper
2007-07-04 14:43:35

“85028, from Dreamy Draw north to Cactus, and from Cave Creek west to Tatum. The number of sales in the area during the month of April - 40 - was equal to the previous year, and the median price was down to $333,000, compared with $377,000 a year ago.”

While far from perfect, comparisons by zip code are a far better indicator of price movement than by city. Zip codes, if small enough, can have a more homogeneous mix of homes so the median doesn’t get skewed as badly…

 
Comment by nonsense
2007-07-04 15:14:59

How screwed up is this country when illegal immigrants can come here in mass numbers, not pay any income taxes, and get loans to buy houses? In any other country you would have to prove you are legally employed with documented income. I often wonder why I should even be a citizen….maybe these “immigrants without borders” are on to something…and I should just leave the US and come back illegally so I don’t have to worry about taxes and obligations of paying back loans.

Comment by Brad
2007-07-04 16:11:49

“not pay any income taxes,”
————————————–
I doubt this is true. They use fake SS numbers to get jobs. No employer can afford to pay cash and not be able to deduct the wages as an expense. So there are all the usual witholdings from the paycheck. However, they might not be filing their tax returns, in which case the gov’t keeps all the witholdings and if the employee was due a refund, they will not get it. Also, when they reach 65 they will not be collecting that money, so the IRS and SS both gain. Thus, illegal immigrants are often paying more taxes than legal workers.

 
Comment by bozonian
2007-07-05 01:23:19

The Constitution doesn’t really cover this area of immigration, probably because it was written at a time when there was no lack of frontier and a huge demand for people to fill it up.

If I could trade my citizenship for an EU country or Canadian I would, since the the only thing citizenship gets you is the right to vote. The right to make a choice between a Total Douche or a Poop Sandwich. Big deal. I’d rather have EU citizenship, be working here like all the other immigrants but be able to bail and work in Europe no questions asked if things go bad here.

Being a citizen doesn’t get you much but the Constitution never said it would.

Comment by AndyInJersey
2007-07-05 08:04:29

I like to think of it as the choice between and Shit Sandwich and a Shit Sandwich with lettuce and tomato.

Comment by House Inspector Clouseau
2007-07-05 10:37:57

douche and poop sandwich comes from “South Park”.

Due to PITA, South Park Elementary had to abandon it’s mascot (a cow), and so Cartman suggested Poop Sandwich and Kyle recommended A Great Big Douche.

In the end, the Poop Sandwich won by a landslide.

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Comment by need 2 leave ca
2007-07-04 15:24:20

I don’t want the illegals (I mean undocumented) workers there in Phoenix to start showing up here in New Mexico. Better call Bill’s office (Richardson - Gov strumming to be President) to ask him to sign a similiar bill. Please have Arizona encourage them to go to places like Mountain View CA since Home Depot is required to feed and house them while they stand there looking for work.

Comment by palmetto
2007-07-04 15:58:34

Bill Richardson sign a similar bill? He’s more likely to make New Mexico a sanctuary state. Interesting that all of a sudden measures are being taken to stem illegal immigration, now that the housing boom is going bust. But the angle of illegals who own homes in a state with tougher laws is interesting, I never thought of how that would affect the market.

 
Comment by John Law(Duke of Arkansas)
2007-07-04 16:10:30

you actually want people and jobs leaving your stay? I’ve seen and lived that, it’s called the rust belt. you can have it, I’m tired of it!

 
Comment by implosion
2007-07-05 06:48:00

Never happen in NM. Our voter ID cards are printed in English and Spanish.

NM gets the most federal money returned to any state per dollar sent to DC in the US (DC gets more). You need to go to Santa Fe and listen to the city pols. It’s a newsworthy trauma if the Feds perform an illegal alien roundup.

 
 
Comment by tj & the bear
2007-07-04 16:22:41

‘A lot of people are planning to leave,’

Great! This’ll put lie to the red herring about “mass deportation”. Arizona will be the test case for the entire nation, and the “Immigrants without Borders” group isn’t going to like the results.

 
Comment by need 2 leave ca
2007-07-04 16:37:07

I too noticed Pat contradict herself - “It’s a great time to buy” = “I really need a commission to pay my exorbitant bills”. “Prices have to come down” = ” anyone listening to my first statement is a complete idiot and will be upsidedown for a long time. But at least, I will get a commission to pay my exorbitant bills. I’ll keep the creditors at bay for another month.”

 
Comment by mad_tiger
2007-07-04 18:49:37

Just checked out North Scottsdale on Zip Realty. Thought things might be different there but nooo. Listings on the market as long as 457 days. Thought this one was a hoot–opportunity has been knocking for 80 days and two price reductions:

***opportunity knocks. Great chance to get into a million plus neighborhood while this is still a buyers market. And this is a nice house too….Take out the over-counter cabinets and open it all up….Best of all this is inside the 101 loop where you soon won`t be able to find even a fix-up under a million. Full set of plans available.

ZipRealty Price Track:

Price Reduced: 05/04/07 — $799,900 to $775,000
Price Reduced: 05/31/07 — $775,000 to $750,000

Days on Market: 80

 
Comment by Bye FL
2007-07-05 07:31:05

If we are already seeing houses now for 50% off, then we can expect to see further drops in the next months and years. This is music to my ears as I have been priced out of almost any house almost anywhere. A 50% drop would make houses in many cities and states affordable to us middle class people.

Questions:

1. Is said drop based on peak prices in q4 2005?
2. Are the drops adjusted for inflation?
3. Will even “cheap” locations experience as much drop? Less? more? I get conflicting answers on that. Some say cheap locations are undesirable and therefore must drop more. Others say cheap locations are more affordable so most people will buy there over the more expensive locations.
4. If the disparity between “cheap” and “expensive” locations shrinks enough, won’t it make more sense to pay a slight premium(as opposed to a huge premium) for the desirable location?
5. Is there really a such thing as “location, location, location” or is this made up by realtors and speculators to justify the bubble prices?

*also see all my replies above*

 
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